Infrastructure Investment Strategy

Federated States of Micronesia
INFRASTRUCTURE DEVELOPMENT PLAN

FY2016-FY2025
Outline:
Introduction, Volume 1 and Annexes
FSM Infrastructure Development Plan FY2016-FY2025
Introduction
This Federated States of Micronesia Infrastructure Development Plan FY2016-FY2025 comprises the
following:
Introduction Volume 3 Chuuk State Infrastructure

Foreword by the President Development Plan
Executive Summary Part 1 Introduction
Acronyms & Abbreviations Part 2 Plan Outline
Part 3 Infrastructure Development
Volume 1 Plan Outline
Part 4 Priority Project Outlines
Part 1 Context
Part 2 Infrastructure Strategy Volume 4 Kosrae State Infrastructure
Development Plan
Part 3 Investment Strategy
Part 1 Introduction
Part 4 Management and Implementation
Part 2 Plan Outline
Part 5 Sector Overview
Part 6 Institutional Aspects
Part 7 Monitoring & Reporting
Volume 5 Pohnpei State Infrastructure
Annexes
Development Plan
Annex A Infrastructure Development
Part 1 Introduction
Responsibility Matrix
Part 2 Plan Outline
Annex B Performance Indicators
Annex C Bibliography
Volume 2 National Infrastructure Development
Plan Volume 6 Yap State Infrastructure Development
Plan
Part 1 Introduction
Part 1 Introduction
Part 2 Plan Outline
Part 2 Plan Outline
The following Federated States of Micronesia Infrastructure Development Plan FY2016-FY2025

documents are available:
Federated States of Micronesia Infrastructure Development Plan FY2016-FY2025 (all parts)
FSM Infrastructure Development Plan FY2016-FY2025 Outline (Introduction, Volume 1 & Annexes)
National Infrastructure Development Plan FY2016-FY2025 (Volume 2)
Chuuk State Infrastructure Development Plan FY2016-FY2025 (Volume 3)
Kosrae State Infrastructure Development Plan FY2016-FY2025 (Volume 4)
Pohnpei State Infrastructure Development Plan FY2016-FY2025 (Volume 5)
Yap State Infrastructure Development Plan FY2016-FY2025 (Volume 6)
FSM Infrastructure Development Plan FY2016-FY2025 Summary (abbreviated outline and listings of projects)
Introduction P a g e |i
P a g e | ii Introduction
Foreword by the
President
Foreword
As the 8th President of the Federated States of Micronesia I

am pleased to present to you an update of our Infrastructure
Development Plan for the period FY2016 – FY2025. This
ranks with the most important and significant plans of the last
10 years for FSM as a nation.
The key for me is that this Plan presents a truly collaborative
approach to infrastructure development for our country. As
well as setting out the case for developing infrastructure
across the FSM, it documents the priority projects in stand-
alone State Plans providing a direct connection to
communities and their needs.
I particularly welcome the inclusion of projects directly linked to climate change adaptation –
these are important first steps to a mainstream infrastructure adaptation program in future Plans.
FSM citizens can also look forward to schools, hospitals, roads and other facilities that are kept in
better condition as we improve the way we manage our infrastructure over its life.
A realistic level of funding is included in the Plan, representing 70 percent of FSM’s
infrastructure needs over 10 years. This sets the challenge for the FSM governments and our
development partners to work together to close the funding gap, beginning with the Development
Partners Forum that we will convene in 2016.
Finally I recognize the considerable effort that has gone into the Plan from State Infrastructure
Planning and Implementation Committees and the State Executives. The assistance of the Asian
Development Bank is also acknowledged for providing the technical assistance team that
supported the Plan development.
I commend this Infrastructure Development Plan to the people of FSM, at home and abroad, and
look forward to the support of our development partners as we begin the challenge of delivering
on our vision.
Introduction P a g e | iii
P a g e | iv Introduction
Executive Summary
Plan Investments
This Infrastructure Development Plan for the Governments of the Federated States of Micronesia was
prepared by the Department of Transportation, Communication and Infrastructure in consultation with
the States of Chuuk, Kosrae, Pohnpei and Yap. The Plan covers the infrastructure in ten sectors: electric
power, water/wastewater systems, solid waste management, road and pedestrian facilities, maritime
transportation, air transportation, telecommunications, education, health and government
administrative buildings.
The priority infrastructure development projects that make up the majority of the Plan have been
identified and prioritized by each of the governments through a structured and transparent process to
produce project listings that best meet their development needs over the next 10 years. This included
assessing the priority development projects against nine strategic objectives to ensure that they make a
strong contribution to one or more of the objectives associated with the FSM’s economic development,
social development, environment and institutional capacity.
The priority infrastructure development projects in the ten sectors at National and State level plus
project management costs, institutional projects and infrastructure maintenance represent a total
investment of $1,082 million over the 10-year Plan period. For the first time a project specifically
targeted at cross-sector climate change adaptation is included. This project in Yap will be followed in the
future by similar projects identified through the Joint National/State Action Plan processes that are now
coming on-line across the FSM.
The Plan incorporates the following investments by sector and by government:
Planned Infrastructure Investment ($ millions)
Infrastructure Sector
National Chuuk Kosrae Pohnpei Yap All
Electric Power - 7.8 17.6 62.6 7.1 95.1
Water/Wastewater Systems - 7.0 14.6 35.7 16.8 74.1
Solid Waste Management - 3.5 0.3 4.5 3.7 12.0
Road and Pedestrian Facilities - 95.0 51.0 45.0 18.1 209.0
Maritime Transportation - 8.5 21.6 6.7 41.9 78.7
Air Transportation 0.5 34.2 31.0 0.6 32.8 99.1
Telecommunications 13.4 - - - - 13.4
Education 69.3 44.7 3.0 73.1 15.7 205.8
Health - 73.0 18.5 15.3 1.7 108.5
Government Administrative Buildings 28.1 - 1.1 5.2 16.9 51.3
Climate Change Adaptation - - - - 4.0 4.0
Program Management 7.5 10.0 4.0 5.0 4.0 30.5
Development Subtotal: 118.7 283.7 162.7 253.8 162.4 981.4
Institutional 2.4 2.0 - - - 4.4
Infrastructure Maintenance 1.2 40.6 12.6 25.5 16.3 96.2
Total Infrastructure Investment: 122.3 326.3 175.3 279.3 178.7 1,082.0
Introduction P a g e |v
Implementation has been planned over three periods; Period 1: FY2016 to FY2019, Period 2: FY2020 to
FY2023, Period 3: FY2023 to FY2025. Appropriation of all Amended Compact funding arrears is included
in Period 1. The proposed sources of funding for the FSM’s 10 year infrastructure investment program by
implementation period are outlined in the following table:
Funding Amount ($ millions)
Infrastructure Investment
Funding Source FY2016 FY2020 FY2023 FY2016
FY2019 FY2022 FY2025 FY2025
FSM National Government 77.2 48.9 48.9 175.0
FSM State Governments (matching maintenance funds) 4.8 3.6 2.4 10.8
Bilateral Development Partners 0.0 0.0 0.0
Amended Compact 207.4 71.7 23.8 302.9
Compact Trust Fund 24.5 24.5
US Federal Agencies 27.0 27.0
European Union 16.5 8.7 10.8 36.0
Japan 20.0 15.0 15.0 50.0
PR China 24.4 15.0 15.0 54.4
UN Climate Adaptation Funds 7.2 11.8 12.0 31.0
Multilateral Development Partners 0.0 0.0 0.0 0.0
Asian Development Bank 17.0 16.5 16.5 50.0
World Bank Group 10.5 10.5 21.0
Total: 401.5 201.7 179.4 782.6
The following charts illustrate the infrastructure investments by sector/activity and by government, as
well as infrastructure funding by source.
Infrastructure Investments by Government
P a g e | vi Introduction
Infrastructure Investment by Sector and Activity
Infrastructure Funding by Source
Introduction P a g e | vii
Plan Implementation
Accountability for implementing the Plan at State level will lie with the Infrastructure Planning and
Implementation Committees that were established more than 10 years ago. An important improvement
in this Plan is the establishment of a Project Management Office in each State, responsible to the
Committee for the day-to-day planning and implementation of projects, initially on Amended Compact
funded projects and progressively for the projects funded from other sources.
At National level the Department of Transportation, Communication and Infrastructure will assume the
overall program coordination role, supported by the Program Management Unit, and will work closely
with the Departments of Finance and Administration and Foreign Affairs as the interfaces with bilateral
and multilateral development partners.
With a number of projects having already been designed under the initial 2004 Infrastructure
Development Plan, implementation of this Plan will begin immediately.
P a g e | viii Introduction
Acronyms & Abbreviations
ADB Asian Development Bank JEMCO Joint Economic Management

ADF ADB Asian Development Fund Committee
AIP FAA Airport Improvement Program JICA Japanese International Cooperation
Amended Compact Agency
Amended Compact of Free Association JNAP Joint National Action Plan
CC Climate Change JSAP Joint State Action Plan
CMD Compact Management Division KIPIC Kosrae Infrastructure Policy
Compact Compact of Free Association Implementation Committee
COM College of Micronesia KSDP Kosrae Strategic Development Plan
CPUC Chuuk Public Utility Corporation KUA Kosrae Utilities Authority
CTF Compact Trust Fund OCR Ordinary Capital Resources
DFA Department of Foreign Affairs ODA Overseas Development Assistance
DOI US Department of Interior ODAD Overseas Development Assistance
DRD Department of Resources and Division
Development OEEM Office of Environment and Emergency
DTCI Department of Transportation, Management
Communication and Infrastructure OIA Office of International Affairs
EDF European Development Fund O&M Operations and Maintenance
EIA Environmental Impact Assessment Plan Infrastructure Development Plan
ENSO El Niño-Southern Oscillation FY2016 – FY2025
EU European Union PMO Project Management Office
FAA US Federal Aviation Administration PMU Program Management Unit
FSM Federated States of Micronesia PSDP Pohnpei Strategic Development Plan
FSMTC FSM Telecommunications Corporation PUC Pohnpei Utilities Corporation
FY Financial Year (1 October to 30 RUS USDA Rural Utilities Service
September) SDC Sustainable Development Council
GDP Gross Domestic Product SDP Strategic Development Plan (2004 –
ICT Information and Communication 2023): Achieving Economic Growth and
Technology Self-Reliance
IDP Infrastructure Development Plan SPC Secretariat of the Pacific Communities
FY2016 – FY2025 UNFCCC United Nations Framework Convention
IDP 2004 Infrastructure Development Plan on Climate Change
FY2004 – FY2023 USDA US Department of Agriculture
IMF Infrastructure Maintenance Fund US United States of America
IPIC Infrastructure Planning and YSPSC Yap State Public Service Corporation
Implementation Committee
Introduction P a g e | ix
Volume 1 Plan Outline

Contents
PLAN OUTLINE
Part 1 Context ___________________________________________________________________________ 1
1.1 Country Information 1
1.2 Economic and Strategic Planning 2
1.3 Infrastructure Planning 6
1.4 Environment and Climate 8
1.5 Plan Development Process 11
Part 2 Infrastructure Strategy ______________________________________________________________ 15
2.1 Role of Infrastructure 15
2.2 Strategy Objectives 15
2.3 Sector Objectives 16
Part 3 Investment Strategy ________________________________________________________________ 19
3.1 FSM Infrastructure Funding 19
3.2 Amended Compact and other US Grant Funding 20
3.3 Bilateral Development Partner Funding 23
3.4 Multilateral Bank Funding 24
3.5 Climate Change Funding 25
3.6 Summary of Available IDP Funding 25
3.7 Plan Funding Requirements 26
Part 4 Management and Implementation ____________________________________________________ 32
4.1 Current Situation 32
4.2 Strategic Considerations and Guiding Principles 32
4.3 Initial Institutional Arrangements 33
4.4 Process Enhancements 36
4.5 Transitional Arrangements and Longer Term Developments 37
Part 5 Sector Overview ___________________________________________________________________ 39
5.1 Institutional Arrangements 39
5.2 Sector Plans 42
Part 6 Institutional Aspects ________________________________________________________________ 44
6.1 Whole of Life Costs 44
6.2 Infrastructure Maintenance 45
6.3 Transition to Contemporary Asset Management 46
6.4 Institutional Projects 49
Part 7 Monitoring & Reporting _____________________________________________________________ 53
Annexes __________________________________________________________________________________ 55
Annex A Infrastructure Development Responsibility Matrix _______________________________________ 57
Annex B Performance Indicators ____________________________________________________________ 59
B.1 Electric Power 59
B.2 Water/Wastewater Systems 59
B.3 Solid Waste Management 60
B.4 Roads and Pedestrian Facilities 61
B.5 Maritime Transportation 62
B.6 Air Transportation 62
B.7 Telecommunications Sector 63
B.8 Education 63
B.9 Health 63
Annex C Bibliography _____________________________________________________________________ 65
V o l u m e 1 Plan Outline P a g e |i
P a g e | ii V o l u m e 1 Plan Outline
Part 1 Context
1.1 Country Information

1.1.1 General and Demographic information
The Federated States of Micronesia (FSM) is a sovereign country comprised of 607 small islands spread
PLAN OUTLINE
over more than one million square miles of ocean in the Western Pacific. Only 67 of the islands are
inhabited. Total land mass area is small, amounting to 270.8 square miles, with only 6 percent of the land
arable. The other two Compact of Free Association nations are its closest neighbors, Marshall Islands to
the northeast and Palau to the west. North of the FSM lie the United States territories of Guam and the
Northern Mariana Islands.
The FSM's population is predominately Micronesian and comprised of eight major ethnolinguistic groups
and numerous spoken dialects. Each state has its own languages, culture, local government, and
traditional systems. With such diversity, English is the country's official language of government
(although less so at the state or municipal levels), and for secondary and tertiary education. Communal
values influence politics, daily business and personal transactions in both direct and indirect ways.
Twenty-two percent of all inhabitants live in "urban" town areas but may own property elsewhere in
their respective states.
Land is part of family trusts that pass down land use rights, surface and subsurface, from generation to
generation within the extended matrilineal family system. Clans hold many parcels, leading to fractional
ownership and uncertain boundaries and titles. By Constitution, only citizens can own land. Domestic
corporations that have non-citizen shareholders may not own land.
Figure 1 – Map of the Federated States of Micronesia
At the time of the 2010 census FSM had a population of 102,843 comprised of: Yap 11,377, Chuuk
48,654, Pohnpei 36,196 and Kosrae 6,616. This population count was a decline of 4,344 persons (-4.1
percent) relative to the 2000 census total. At the state level between 2000 and 2010, Chuuk and Kosrae
had negative growth while in Pohnpei and Yap the rate of growth was positive but very low at 0.4
percent and 0.1 percent respectively. Out-migration to the United States and other parts of Micronesia is
the primary cause of the overall decline in population with a reducing fertility rate also contributing.
Long-range population projections suggest a continuation of little or no population growth for the
foreseeable future. Projections to 2030 suggest no population growth from 2010 and less than
10percent total growth up to 2050. The level of urbanization in FSM remains relatively low at 22
V o l u m e 1 Plan Outline P a g e |1
percent1. Most people live a rural lifestyle largely dependent on their gardens and fishing for daily food
requirements, although imported food is an increasing part of the diet. People are attracted to urban
centers for incomes directly or indirectly derived from offshore transfers in the form of grants from the
United States (US) and other donors.
Based on a 2008 poverty assessment2, 11 percent of the population suffered from food poverty, while
29.9 percent of the population suffered from basic needs poverty. The opportunities for income
generation are limited, especially in the rural parts of the country. With the stagnation of real incomes
since 2005 accentuated by sharp decreases in gross domestic product (GDP) since 2012, poverty will
have worsened.
1.1.2 Government Framework
The Constitution of the FSM provides for three separate branches of government at the national level
similar to those of the U.S. The National Congress, however, is unicameral. It has four at-large senators,
one from each state that serves four years, and ten senators who have two-year terms. The President
and Vice President are senators at-large elected by Congress rather than by popular vote. The last
Congressional election for four-year terms was in March 2015. The 19th FSM Congress elected Pohnpei’s
Peter M. Christian to be the eighth President of the Federated States of Micronesia.
The nation itself is a loose federation. State affiliation tends to overshadow national identity.
The FSM Constitution limits the FSM national government's (executive branch) power and confers
"residual powers" to the states, necessitating a complex and lengthy consultative process before the
implementation of new national policies, regulations and programs.
1.1.3 Compact of Free Association
In 1986 FSM entered into a Compact of Free Association (Compact) with the US. FSM has full control
over all aspects of domestic and foreign policy, with the exception of defense and security issues for
which the United States is responsible. The Compact also affords the US defense and operating rights in
FSM and grants FSM citizens access to US federal programs and favorable provisions for travelling to and
working in the US.
A second Compact agreement, the Amended Compact of Free Association (Amended Compact), came
into effect in 2004 and provides $1.8 billion of funding over twenty years, including contributions to a
Compact Trust Fund (CTF) intended to replace the direct financial assistance that concludes in 2023.
1.2 Economic and Strategic Planning

1.2.1 The Economy
The FSM economy has languished over the last decade and real GDP growth has averaged -0.4 percent.
This has resulted in declining living standards and contributed to net outward migration. An ongoing
excess of imports over exports sees a continuing deficit in the trading account of the balance of
payments. The economy is firmly tied to overseas aid which is significant relative to domestic revenues
at the State level and is dominated by funding coming from the Amended Compact.
Most recently the March 2012 JEMCO resolution that no further Amended Compact infrastructure grants
will be made until the IDP 2004 is updated has led to a decline in construction activity of 26 percent in
FY2013 followed by 41 percent in FY2014. Along with a 15 percent decline in domestic fisheries in 2013
this has contributed to the worst period of economic performance since the start of Amended Compact
1(Jones, 2011) - The State of Pacific Towns and Cities

2(World Bank, 2014) - International Development Association and International Finance Corporation Country Partnership Strategy for the
Federated States Of Micronesia for the period FY2014 – 2017
P a g e |2 V o l u m e 1 Plan Outline
in FY2004 with sharp contractions in GDP of -3.6 percent in FY2013 followed by -3.4 percent in FY2014 as
illustrated in Figure 2.
At the end of FY2015 there is $111.3 million in unallocated Amended Compact infrastructure funds.
Obtaining the release of these funds is critical to restoring construction activity and getting GDP out of
negative growth. Infrastructure development will contribute to significant improvement in GDP with the
availability of Amended Compact arrears and annual appropriations over the next four years.
PLAN OUTLINE
Figure 2 – Real GDP Levels ($ millions)
Source: CMD presentation to JEMCO, August 2015 – “Dismal growth scenario” was the lowest forecast
growth scenario in the SDP
In view of past economic performance and the end of Amended Compact grants in 2023 the FSM
governments developed an economic growth strategy, the 2023 Action Plan (section 1.2.3), the aim of
which is to ensure that the transition from Amended Compact grants to CTF revenue does not threaten
service delivery. The thrust of the plan is to grow the economy by strengthening the private sector while
lessoning the dependence on the public sector. The overall target of 2 percent per annum economic
growth is dependent on reforming structure, tax and public administration. The economic growth target
also requires improved performance in six key areas: tourism, agriculture, fisheries, energy, information
and communication, and infrastructure.
Expanding public infrastructure will add to the productive capacity of the economy in the longer term
and in the short term create jobs. To facilitate this a key component of the 2023 Action Plan is to
accelerate appropriation of the Amended Compact infrastructure arrears of $111.3 million over four
years (FY2016 to FY2019). Together with the renewed flow of annual Amended Compact infrastructure
funds, this will provide a $207.4 million boost to the construction sector in particular and the economy in
general.
1.2.2 Previous Strategic and Infrastructure Planning
Strategic Development Plan 2004 – 2023
FSM’s Strategic Development Plan 2004 – 2023: The Next 20 Years, Achieving Economic Growth and
Self-Reliance (the SDP) was prepared with broad participation of a wide range of stakeholders and
provides a road map for social and economic development in FSM for the period 2004 – 2023. The SDP
states four main objectives:
1. Stability and security - to maintain economic assistance at levels that support
macroeconomic stability; achievement of this objective requires levels of funding close to
prevailing levels, to avoid the large periodic step downs in funding that were a characteristic
of the first 14- year Compact funding package.
2. Improved enabling environment for economic growth - to be achieved through the FSM
commitment to economic reform and the provision of an enabling environment to support
open, outward - oriented and private sector led development.
3. Improved education and health status – use of the annual Compact grant to support the
provision of basic services in education and health.
4. Assured self-reliance and sustainability - to be achieved through establishment of a Trust
Fund that would, after a period of time, replace the annually appropriated transfers from
the US.
The sustained growth strategy presented in the SDP has six key areas:
1. macroeconomic stability
2. good governance
3. developing an outward-oriented, private sector-led economy
4. investing in human resources (improved health and education services)
5. investing in infrastructure
6. long-term environmental sustainability
The SDP consists of three volumes. Volume 1 provides for the macro-economic framework and the
policies for each sector, Volume 2 contains the sector planning matrices and Volume 3 is the
Infrastructure Development Plan.
1.2.3 Recent Economic and Strategic Planning
Working with Development Partners
While the US through the Amended Compact and Federal grants is the dominant partner, other main
bilateral partners include Australia, China, Japan, the European Union through regional bodies such as
the Secretariat of the Pacific Communities, and the United Nations.
Historically, FSM’s dialogue and coordination with non-US bilateral development partners has been weak
due to the dominance of the Compact, but with 2023 looming has recently been strengthened. An
Overseas Development Assistance (ODA) policy was approved by Congress in January, 2014. The purpose
of the policy is to establish approaches to managing ODA such that benefits are maximized for all
stakeholders. The policy acknowledges, recognizes and respects the unique circumstances of each state
but also seeks commonalities across FSM. Implementation of the policy began in 2014.
A Development Partners Meeting took place in November, 2012 with the purpose of accelerating
implementation of the SDP and seeking development partner support across four broad areas:
1. growing the local economy through enhancing agriculture production and the production of
value added agriculture products, maximizing benefits of FSM’s fisheries resources,
promoting tourism, developing clean, renewable energy sources
2. developing economic infrastructure, including transport, communications, and power
3. improving health and education services
4. mainstreaming responses to climate change and mitigating threats to the environment
A second Development Partners meeting is scheduled for 2016 where development partners will be
invited to commit to funding IDP priority projects.
2023 Action Plan

The FSM Governments prepared the 2023 Action Plan in 2014 aimed at addressing the fiscal and
economic challenges leading up to and post FY2023. It is based on the mutual principals of Amended
Compact which are to “promote the economic advancement, budgetary self-reliance, and economic self-
sufficiency of the FSM”. The 2023 Action Plan includes a long-term fiscal reform strategy and a long-term
sustainable growth strategy with the emphasis on private sector led growth.
PLAN OUTLINE
With infrastructure investments an important driver for economic growth, directly by generating
employment and income and indirectly facilitating the development of other sectors of the economy, a
key component of the plan is to eliminate the infrastructure funding backlog within four years.
1.2.4 State Strategies
Chuuk
Chuuk is currently developing a strategic development plan to guide the future development of the
State.
Kosrae
In 2013 the Kosrae Strategic Development Plan: 2014 – 2023 (KSDP) was finalized, recognizing the needs
and aspirations of the Kosrae community and stakeholders in Kosrae. The KSDP takes a 10 year view of
Kosrae and its place in Federated States of Micronesia and the North Pacific region and the opportunities
and concerns that it faces.
Additional aspects of the KDSP are included in Volume 4.
Pohnpei
The Pohnpei State Strategic Development Plan (PSDP) is a strategic policy document intended to
organize and integrate existing sector plans and programs, and the SDP to meet the unique needs of
Pohnpeian citizens and residents and to present a unified vision of Pohnpei’s future.
Additional aspects of the PDSP are included in Volume 5.
Yap
Yap is currently without its own strategic development plan.
1.2.5 Sector Policies
Sector Policies
The goals and institutional reforms included in the IDP 2004 for each sector have largely been
incorporated into the IDP. More recently policies have been released for the energy and
telecommunications sectors, and more relevant objectives in the education sector have been identified
in State school repair and construction master plans and in the College of Micronesia Master Plan.
Energy Sector Policy
The National Energy Policy3 has four primary components: Policy and Planning, Conventional Energy
(fossil fuel), Energy Efficiency and Conservation, and Renewable Energy.
The policy has targets to increase the share of renewable energy to 30 percent of energy supply by 2020
and to increase energy efficiency by 50 percent, also by 2020. With the electric power sector being an
important component of the larger energy sector these targets have been taken into consideration when
identifying and prioritizing projects in the IDP.
3
(DRD, DoE, 2010) - Federated States of Micronesia Energy Policy, Volumes I and II
Telecommunications Sector Policy

The Information and Communications Technology (ICT) Policy4 aims at:
1. achieving accessible and affordable communications for all
2. strengthening ICT human resources and increasing human resource development
opportunities through ICT
3. improving economic growth and sustainable development through ICT
4. utilizing ICT for good governance
5. creating an enabling ICT environment through policy reform and improved legal frameworks
The aims of the policy have been taken into consideration when identifying and prioritizing projects in
the IDP.
1.3 Infrastructure Planning

1.3.1 Infrastructure Development Plan 2004-2023
The Infrastructure Development Plan 2004-2023 (IDP 2004) (Volume 3 of the SDP) was prepared by the
Department of Transportation, Communication and Infrastructure (DTCI) in consultation with the States
and under the guidance of a national IDP Steering Committee. IDP 2004 assessed the state of
infrastructure and the needs in nine sectors and incorporated a program and budget covering the period
FY2004-FY2023. Special consideration was given to the likely funding available from the Amended
Compact and from other sources.
The National Vision and Objective statements in IDP 2004 for Infrastructure are:
Vision: To improve the life and livelihood of all FSM citizens with affordable, reliable and
environmentally sound infrastructure.
Objective: To promote the sustainable social and economic development of FSM through the
provision and utilization of cost-effective, safe, reliable and sustainable infrastructure.
The IDP 2004 included $748 million of indicative funding for infrastructure investments to be
implemented over the 20-year period. The IDP 2004 also included a further $878 million of “unfunded
projects” for a total of $1,626 million. Amounts by sector are shown in Table 1.
Actual funding in FY2004 to FY2015 amounted to $600 million representing 80 percent of IDP 2004
indicative funding with eight years of the IDP 2004 to run. If the withheld Amended Compact funding
FY2013 to FY2015 had been granted actual funding would be around 90 percent of the IDP 2004
indicative funding.
Compared with the average IDP 2004 funding of $35 million per year, the actual average funding rate of
around $58 million per year with full Amended Compact funding demonstrates FSM’s ability to source
additional infrastructure funds.
4
(DTCI, DoC, 2012) - Federated States of Micronesia National ICT and Telecommunications Policy
Table 1 – Planned IDP 2004 Sector Investments

IDP 2004 Project Totals 2004-2023
Actual FY2004 to FY20151
($ Millions)
Sector
Total % of IDP % of IDP
Funded Unfunded Total
($ millions) Funded Total
PLAN OUTLINE
Electric Power 81.1 56.9 138.0 48.0 59% 35%
Water/Wastewater Systems 141.9 266.2 408.1 41.0 29% 10%
Solid Waste Management 40.8 102.5 143.3 0.3 1% 0%
Roads and Pedestrian Facilities 120.9 155.6 276.5 56.8 47% 21%
Maritime Transportation 88.5 141.6 230.1 32.5 37% 14%
Air Transportation 68.4 17.1 85.5 237.8 348% 278%
Telecommunications2 51.4
Education 135.4 138.1 273.5 45.8 34% 17%
Health 32.5 0.0 32.5 11.2 34% 34%
Government Administrative Buildings 27.3 0.0 27.3 17.5 64% 64%
Infrastructure Maintenance3 36.2
Program Management (incl. PMU, designs) 10.7 0.0 10.7 21.1 197% 197%
TOTAL 747.5 878.0 1,625.5 599.6 80% 37%
Notes:
1. Estimate based on Amended Compact Grants, ODA Funding & National & State Government
appropriations
2. Telecommunications Systems was included in IDP 2004 as a sector but did not have an investment plan
3. Maintenance funding included in IDP 2004 sector funding
1.3.2 Infrastructure Development Plan 2016 - 2025

This Infrastructure Development Plan FY2016 – FY2025 (the IDP or Plan) outlines the governments of
the FSM priorities and plans for major infrastructure initiatives over the next 10 fiscal years. This is the
second infrastructure development plan and the prioritization of projects will be reviewed at regular
intervals as part of the national and state planning and budgeting processes. The next review of project
priorities will be undertaken in FY2019.
The IDP includes infrastructure development initiatives of national, state and local significance. It is the
result of extensive consultation with infrastructure managers and stakeholders at national, state and
local level and covers the following sectors:
 electric power  air transportation
 water/wastewater systems  telecommunications
 solid waste management  education
 roads and pedestrian facilities  health
 maritime transportation  government administrative buildings
The IDP presents a systematic approach to infrastructure planning, coordination and implementation,
setting out the governments’ priorities for infrastructure investments, developed at the national level
and across the states and sectors on a project by project basis. In particular the IDP provides:
 the foundation for medium and longer term infrastructure budget planning through its
overview of the scale and sequencing of future investment and financing needs
 a strengthened institutional framework for infrastructure planning and implementation at
program and project levels
 an approach for transitioning to whole-of-life asset management
 consolidated guidance for FSM’s development partners on the priorities and scope of FSM’s
infrastructure needs over the next 10 years
1.3.3 Amended Compact Requirements
Article V of the Amended Compact sets out the Pre-Award Requirements for grant assistance including
the submission of annual implementation plans developed by the Government of the FSM in conjunction
with its budget process. It further goes on to describe additional requirements for infrastructure
assistance, including:
(e) The Government of the Federated States of Micronesia shall develop and submit a nationwide infrastructure
development plan (IDP) to the Government of the United States for review. Projects may be phased over two or
more years. The annual implementation plan for the infrastructure sector referred to in (b) above, shall include a
list of integrated state and national priorities for new and reconstructed capital infrastructure to be financed by
Compact funds, cost requirements, and implementation schedule. This project list and any revision thereto shall be
submitted to the Government of the United States. Insofar as Grant funds are involved, the IDP shall be subject to
the concurrence of the Committee.
1.4 Environment and Climate

The SDP incorporates an Environment Sector Strategic Plan with its own strategic goals, policies and
outcomes, including:
Strategic Goal 1: Mainstream environmental considerations, including climate change, in national policy and
planning as well as in all economic development activities
(SDP, section 7.2.1)
FSM’s climate change profile and vulnerability and disaster risk reduction have been documented in a
range of reports, including:
 Analysis of Integrating Disaster Risk Reduction and Climate Change Adaptation in the US
Pacific Islands and Freely Associated States5
 Climate Change Profile, Federated States of Micronesia6
 Climate Variability, Extremes and Change in the Western Tropical Pacific 7
5 (Anderson, 2012) - Analysis of Integrating Disaster Risk Reduction and Climate Change Adaptation in the US Pacific Islands and Freely
Associated States, Technical Report 201105, Hazards, Climate, and Environment Program
6 (GCCA, July 2013) - Climate Change Profile, Federated States of Micronesia, Version 2
7 (ABM/CSIRO, 2014) - Climate Variability, Extremes and Change in the Western Tropical Pacific: New Science and Updated Country Reports,
Pacific-Australia Climate Change Science and Adaptation Planning Program
1.4.1 Environmental Planning

The Environmental Sector Strategic Plan includes the following outcome measure for Strategic Goal 1:
Environmental Impact Assessments (EIA) carried out for 100% of all government and non-government
development activities to minimize adverse impacts of development on the nation's environment from 2005
onwards
PLAN OUTLINE
(SDP, section 7.2.1, para 57)
Environmental legislation does not necessarily require EIAs on all projects however in keeping with the
intent of Strategic Goal 1 and the above outcome measure all IDP projects will comply with relevant
environmental planning provisions, unless explicitly exempt.
1.4.2 Current Climate
Due to the geographical spread of the FSM, the climate varies on an east to west basis. There is little
seasonal variation in temperature with less than 3°F (1.5°C) between the average hottest and coolest
months. There are two distinct seasons; a wet season from November to April and a dry season from
May to October. Droughts, tropic storms, storm waves, flooding and landslides all affect FSM.
FSM’s climate can vary considerably from year to year due to the El Niño-Southern Oscillation (ENSO)
that sees both El Niño and La Niña events on a cyclic basis. El Niño events are associated with drier
conditions and occasional droughts when associated water and food shortages can occur. During La
Niña, above-average numbers of tropical storms occur as well as more rainfall.
1.4.3 Expected Future Climate
Predictions of climate change in countries of the Western Pacific, including FSM, has been developed
under Pacific-Australia Climate Change Science and Adaptation Planning Program 7. All emissions
scenarios show that temperatures will rise in FSM, as will sea level and ocean acidification. The intensity
and frequency of days of extreme rainfall are projected to increase and tropical storm frequency is
projected to decline.
The ENSO is expected to continue to influence variability in FSM’s climate however as there is no
consistency in projections of future ENSO activity it is not possible to determine whether inter-annual
variability in rainfall will change in the future.
For the period to 2100, the latest global climate model projections and climate science findings indicate:
1. El Niño and La Niña events will continue to occur in the future (very high confidence), but
there is little consensus on whether these events will change in intensity or frequency;
2. annual mean temperatures and extremely high daily temperatures will continue to rise
(very high confidence)
3. average annual rainfall is projected to increase (medium confidence), with more extreme
rain events (high confidence)
4. drought frequency is projected to decrease (medium confidence)
5. ocean acidification is expected to continue (very high confidence)
6. the risk of coral bleaching will increase in the future (very high confidence)
7. sea level will continue to rise (very high confidence)
8. wave height is projected to decrease in December–March (low confidence), and waves may
be more directed from the south in the June–September (low confidence)
1.4.4 Response to Climate Change

National Level
The National Climate Change Policy of 20098 includes the following key elements related to
infrastructure:
1. Mitigation
…..
c. To maintain and enhance FSM as a negative carbon country through effective management of our natural sinks,
bio-sequestration, promotion of renewable energy and energy efficiency and other appropriate means.
d. To prioritize actions that address both mitigation and adaptation such as water development using renewable
energy (solar water desalination) and other relevant actions.
2. Adaptation
a. To require all development activities in FSM to take into account projected climatic changes in the design and
implementation as stipulated in the FSM Strategic Development Plan/Infrastructure Development Plan (SDP/IDP).
b. To use eco-system based approaches where applicable.
3. Technology Transfer
a. To optimize the use of local technologies where available.
b. To identify technologies that are locally appropriate.
c. To enhance easy access to, and sustainable use of new technologies.
4. Finance
a. To maximize the use of local resources through establishment of sustainable financing mechanism to support
adaptation, mitigation and resource management initiatives.
In 2012 FSM published an Action Plan9 and in 2013 passed a Climate Change Law10, a key requirement
being that certain National Departments prepare plans and policies on climate change consistent with
the provisions of the Climate Change Policy.
In June 2013 Government produced the Nation Wide Integrated Disaster Risk Management and Climate
Change Policy11 under which the DTCI will integrate the Policy into its infrastructure development policy
and plans.
A Council on Environmental Management and Sustainable Development (or Sustainable Development
Council) chaired by the Vice-President was established through Presidential Order No. 14. The functions
and purposes of the Sustainable Development Council are to advise and make recommendations to the
President on matters affecting the environmental management and sustainable development of the
FSM.
Potential projects and the approach to climate proofing were previously addressed in a study in 200612.
In 2014 DTCI prepared a Climate Adaptation Guide for Infrastructure13. This provides a first step in
mainstreaming climate change in all infrastructure projects in FSM.
State Level
Climate Change Action Plans have been developed for Kosrae and Yap; preparation of an Action Plan for
Pohnpei is ongoing and for Chuuk has yet to start.
8 (GoFSM, 2009) - Nationwide Climate Change Policy 2009.

9 (GoFSM, 2012) - National Climate Change and Health Action Plan, December 2012.
10 (GoFSM, 2013a) - Eighteenth Congress Of The Federated States Of Micronesia Second Regular Session, 2013 Congressional Bill No. 18-72,
C.D.1, C.D.2, C.D.3 Pc No. 18-178 Public Law No. 18-34.

11 (GoFSM, 2013b) - Nation Wide Integrated Disaster Risk Management and Climate Change Policy
12 (ADB Pacific Studies Series, 2006) - Climate Proofing – A Risk-based Approach to Adaptation
13
(DTCI, DoI, 2014) - Climate Adaptation Guide for Infrastructure
P a g e | 10 V o l u m e 1 Plan Outline
The current State Action Plans identify requirements for infrastructure under three headings, and their
relevance to the IDP are summarized as:
 Strengthen the integrity of the development consent process and environmental impact
assessments: environmental concerns, including both impacts and geo-hazard issues should
be identified:
 early in the scoping phase, so that the costs of mitigation can be allowed for when setting
PLAN OUTLINE
budget
 during design, so that appropriate mitigation measures are part of the design
 during construction to ensure the appropriate environmental management plan is followed
and mitigations properly implemented
 Apply Land Use Planning: available flood, sea level change and landslide risk maps are used
particularly in assessing sites for infrastructure development
 Actively Enforce Building Codes: in the absence of formal building codes, adopt and follow
standards and practices that are appropriate to the infrastructure being developed,
including aspects relevant to climate change adaptation
1.5 Plan Development Process

1.5.1 Components and Overall Approach
Development of the IDP involved three main components; infrastructure, institutional and funding, and
the overall approach illustrated in Figure 3.
Figure 3 – IDP Development Approach
The three components are described below.

1.5.2 Infrastructure
The infrastructure review determined the current status of infrastructure in the ten sectors across FSM,
including the demand for infrastructure and current infrastructure performance. Background reports and
data were reviewed and visits were made to the States to learn of the demands and needs from the
V o l u m e 1 Plan Outline P a g e | 11
Executive and infrastructure managers. From these sources long lists of sector projects were produced
and the results documented in the Infrastructure Review Report.
Subsequent to the infrastructure review and long lists of projects, additional interactions at national
level and in each State produced a list of priority projects for each jurisdiction with the indicative
funding envelopes providing guidance on the total funding available for the priority projects. The
additional interactions also collected and/or confirmed all of the information for the documentation of
priority projects in the form of the priority project outlines included in Part 4 of each of the following
IDP volumes.
Project prioritization was undertaken with a group that included representatives of the Executive and
Legislature, infrastructure managers and civil society representatives. Inputs to the process included
current Infrastructure Planning and Implementation Committee (IPIC) listings and priorities and the long
list of projects. The process set out in Figure 4 was followed by the group to identify, prioritize and rate
the projects included in their IDP.
Figure 4 – Project Prioritization
•Is a project in the long list infrastructure that the Nation/State needs in the next 10
Step 1 years? – if yes, add the project to the initial list of priority projects
produce the •Considering the indicative funding envelope, is it realistic to expect that all of the
priority project initial priority projects can be implemented? – if no, remove projects from the list of
list priority projects to the point that the total estimate of priority projects was more
realistic in the context of the indicative funding envelope
•Relative to other projects, should the priority project funded in the first, second or
Step 2 third period of the IDP? (FY2016-FY2019, FY2020-FY2022 or FY2023-FY2025) – indicate
the identified period(s) in the list of priority projects
prioritize •Considering the indicative funding envelope for each period, is it realistic to expect
projects by that all of the identified priority projects can be implemented in that period? – if no,
funding period revise the funding periods until the total estimate in each period is more realistic in the
context of the indicative funding envelope
Step 3 •To what extent does each priority project contribute to the strategic objectives? –
indicate the contribution rating against each strategic objective in the list of priority
contribution of projects
priority projects •Does the priority project make a strong contribution to the strategic objectives? –
to the strategic reconsider the inclusion of any project that does not make a strong contribution to the
objectives strategic objectives
The prioritization group also assessed the contribution that each priority project makes to the Strategic
Objectives (section 2.2) to produce a Strategic Rating out of 10. Priority projects were rated for their
contribution to each of the nine component objectives using the contribution ratings in Table 2. The
Strategic Rating was determined using the following formula:
Strategic Rating (out of 10) = ∑ 𝑅𝑎𝑡𝑖𝑛𝑔 𝑜𝑓 𝑒𝑎𝑐ℎ 𝑠𝑡𝑟𝑎𝑡𝑒𝑔𝑖𝑐 𝑜𝑏𝑗𝑒𝑐𝑡𝑖𝑣𝑒 / 4.5
The indicative 10 year infrastructure developments from each State project prioritization exercise were
consolidated in a report to the Governor for review and endorsement. Any revisions to the information
provided have been carried forward into the IDP.
Table 2 – Contribution ratings

Rating 1 The project will make little or no contribution to the strategic objective
Rating 2 The project will make a low contribution to the strategic objective
Rating 3 The project will make a medium contribution to the strategic objective
Rating 4 The project will make a high contribution to the strategic objective
PLAN OUTLINE
Rating 5 The project will make a very high contribution to the strategic objective
1.5.3 Institutional Component
The review of institutional arrangements & performance determined the strengths and weaknesses of
the institutional arrangements that have been in place in the period since 2004. Background reports and
data were reviewed, discussions were held with the Program Management Unit (PMU) and visits were
made to the States to learn of their IDP implementation issues and expectations.
A number of alternative models were developed for consultation on improved arrangements with
national and state stakeholders, at the conclusion of which a Report on Institutional Strengthening was
finalized.
The recommended institutional arrangements were strongly endorsed by all State Governors and
supported by the President. Revised institutional arrangements were subsequently developed in more
detail, including identification to changes in legislation and regulations. Actions for transitional and
longer term development of the institutional arrangements have been identified and incorporated into
the IDP.
1.5.4 Funding Component
The review of infrastructure funding identified $608 million of indicative baseline funding for
infrastructure development expected from traditional sources over the next 10 years, including from:
 National Government revenue
 Amended Compact
 multilateral development banks
 bilateral development assistance
The indicative funding envelopes set out the availability of infrastructure development funding by
source by year for each state and the national program and provided guidance to the identification of
priority projects. The indicative funding envelopes did not:
 factor in future one-off project funding that is additional to the baseline funding
 include any provision for UN-related climate change adaptation funding

A Funding Envelope Report provided full details of the review of infrastructure funding and the resultant
indicative funding envelopes.
The infrastructure funding requirements derived from the lists of priority projects exceed the indicative
baseline funding, recognizing the availability of additional funding for infrastructure development in
addition to the baseline funding.
The funding strategy set out in Part 3 incorporates:
 an increase in the indicative baseline funding to $751.9 million, including $31 million of
climate adaptation funding over 10 years
 the annual appropriation of funds by source and by sector over the duration of the IDP
Part 2 Infrastructure Strategy
2.1 Role of Infrastructure

Infrastructure is a critical component of the economic and social fabric of society. In the context of the
IDP it is the fundamental facilities and systems providing the services and facilities necessary for the
economy and society to function. It comprises the roads, bridges, schools, hospitals, ports, airports,
PLAN OUTLINE
water supply, waste water, solid waste, electrical grids and telecommunications; the physical
components of interrelated systems providing commodities and services essential to enable, sustain, or
enhance societal living conditions.
One way to increase economic output quickly is to expand public infrastructure that would add to the productive
capacity of the economy in the longer term and create jobs in the near term. A key component of the Action Plan is
the accelerated spending of the infrastructure arrears of $126 million over the next four years.
Development literature and field experience worldwide underscore the influence of market expanding
infrastructure in fostering economic growth and productivity, particularly in emerging economies and there is
ample evidence that market expanding infrastructure both raises growth and lowers income inequality.
(2023 Action Plan)
2.2 Strategy Objectives

2.2.1 Vision and Objective
The national Vision and Objective statements in IDP 2004 remain appropriate for the IDP:
Vision: To improve the life and livelihood of all FSM citizens with affordable, reliable and
environmentally sound infrastructure.
Objective: To promote the sustainable social and economic development of FSM through the
provision and utilization of cost-effective, safe, reliable and sustainable infrastructure.
2.2.2 Component Objectives
Taking into account the strategic statements in the IDP 2004 and more recently the 2023 Action Plan and
the challenges presented by climate change, the component objectives in Figure 5 have been adopted in
the IDP. All priority infrastructure projects have been rated against these objectives to ensure the overall
alignment of the IDP investments with its strategic objectives.
Figure 5 – Component Strategic Objectives
Economic Social Environmental Institutional
Improved Improved access to Improved Improved capacity

investment and and delivery of environmental of government
economic growth public health outcomes and infrastructure
Improved private services conditions agencies
sector capacity and
employment Improved natural
Improved access to Improved financial
Improved living disaster and
and delivery of sustainability of
conditions and climate change
education services infrastructure
income generation resilience
2.3 Sector Objectives

Within the overall infrastructure development objectives each sector has a number of identified goals
consistent with those incorporated into the IDP 2004.
2.3.1 Electric Power
The Goal is to develop electric power infrastructure to ensure that all areas of the country are provided
with electric power in an efficient and effective manner in accordance with demand such that:
1. households are provided with power for basic livelihood purposes
2. local manpower can realize production opportunities and potential
3. power is available for basic services such as schools, hospitals, water and wastewater
systems
4. national targets for renewable energy are achieved
2.3.2 Water/Wastewater Systems
The Goal is to provide water and wastewater infrastructure that:
1. meets the demand for water supply and wastewater infrastructure in an effective and
efficient manner
2. improves existing water abstraction, treatment and distribution systems
3. evaluates and institutes technologically appropriate liquid waste management systems
4. improves and initiates wastewater facilities to increase coverage and contribute towards
improvements in public health and environmental conditions
5. contributes towards the prevention of water borne diseases through the provision of
potable water supplies
2.3.3 Solid Waste Management
The Goal is to provide solid waste management infrastructure that:
1. meets the demand for solid waste infrastructure in an effective and efficient manner
2. evaluates and institutes technologically appropriate solid waste management systems
3. reduces volume of solid waste for disposal by maximizing recycling and separation
opportunities thereby minimizing the land area required
4. prevents solid waste having adverse effects on the terrestrial and marine environments
2.3.4 Road and Pedestrian Facilities
The Goal is to provide road and pedestrian facilities infrastructure that:
1. enables transportation facilities to be adequate in terms of condition, capacity, reliability
and safety to enable market opportunities to be realized for all areas of the country,
including labor market opportunities, and to enhance the level of integration of state
economies and the national economy
2. meets the demand for road and pedestrian infrastructure in an effective and efficient
manner, including concrete/asphalt paving of all primary road systems
3. incorporates pedestrian walkways in the design and construction of roads
4. extends cross-island and inner roads to facilitate agricultural and other development
5. is resilient to the impacts of climate change
2.3.5 Maritime Transportation

The Goal is to provide maritime transportation infrastructure that:
1. enables market opportunities to be realized for all areas of the country, including labor
market opportunities, and to enhance the level of integration of state economies and the
national economy
PLAN OUTLINE
2. provides improved dock facilities to meet both fisheries and commercial shipping needs
3. facilitates modern, safe and efficient inter-state and inter-island passenger and cargo
vessels
4. coordinates and facilitates the improvement of aids to navigation
2.3.6 Air Transportation
The Goal is to provide air transportation infrastructure that:
1. provides adequate air transportation facilities and services in terms of condition, frequency,
capacity, reliability and safety to enable market opportunities to be realized for all areas of
the country
2. enables air carrier airports to improve safety and eliminate payload restrictions
3. improves all domestic airports to the required standards of safety
2.3.7 Telecommunications Systems
The Goal is to provide telecommunications systems infrastructure to:
1. achieve accessible and affordable communications for all
2. strengthen information and communications technology (ICT) human resources and
increase human resource development opportunities through ICT
3. improve economic growth and sustainable development through ICT
4. utilize ICT for good governance
5. create an enabling ICT environment through policy reform and improvements in legal
frameworks
2.3.8 Education
The Goal is to provide education infrastructure that:
1. ensures that the learning experience is enhanced and diversified
2. improves student and faculty interest and morale, and thereby improves the effectiveness
of education and significantly increases the student retention rates through graduation from
elementary or secondary schools
3. removes constraints on the availability of high school education for all graduates of
elementary school, and to provide an array of post-secondary education opportunities for
all high school graduates who seek further education
4. continues to assist and strengthen private educational institutions to the nation
5. is supported by facilities improvement programs that address the need for maintenance,
renovation and construction of new facilities to support quality student instruction
6. is supported by equipment maintenance guidelines
7. is resilient to potential natural disasters and the impacts of climate change
2.3.9 Health
The five strategic goals of health care14 are to:
1. improve primary health care services
14
(DHSA, 2013) - Department of Health and Social Affairs Annual Report 2013
2. improve secondary health care services

3. prioritize health promotion services on major health problems
4. develop a sustainable health care financing mechanism
5. improve capacity and accountability systems
In support of those goals, the Goal of health infrastructure is to:
1. provide modern and efficient hospital facilities to meet the health needs of the nation
2. facilitate an upgraded the curative health system to minimize the needs for referrals to
foreign medical facilities
3. provide health care facilities within reasonable access of all citizens
4. have facilities improvement programs that address the need for maintenance, renovation
and construction of new facilities
5. have adequate funds for maintenance to prevent rapid deterioration of facilities
6. be resilient to potential natural disasters and the impacts of climate change
2.3.10 Government Administrative Buildings
The Goal is to provide government administrative building infrastructure that:
1. provides modern and efficient facilities required for government personnel to effectively
undertake their functions
2. provides an environment that enables equipment used by government personnel to be
adequately maintained
3. encourages a high morale and work ethic amongst government employees by providing a
suitable work environment
4. provides elected officials with suitable office space and chambers in which to conduct their
responsibilities
Part 3 Investment Strategy
3.1 FSM Infrastructure Funding

3.1.1 National Government
Fiscal position
PLAN OUTLINE
The National Government has a relatively low level of debt providing latitude for judicious borrowing,
including to leverage grant funds from other sources.
Infrastructure development
Prior to FY2014 national infrastructure projects were funded by donors including a 10 percent allocation
from Amended Compact infrastructure grants. In FY2014 the government cut the Amended Compact
infrastructure grant allocation to 5 percent and from FY2015 onwards the National Government receives
no infrastructure funding from the Amended Compact.
As a response to the March 2012 Joint Economic Management Committee (JEMCO) resolution to
withhold infrastructure grants pending the updating of the IDP 2004, the National Government is making
a specific allocation from its own revenue amounting to $10 million in both FY2015 and FY2016 for State
priority infrastructure projects. In addition there have been separate National Government
appropriations for outer island airstrip improvements and power generation. The indicative estimate for
FY2017 onwards is $11 million as shown in Table 3.
Infrastructure maintenance
National Government funding for maintenance of national and state assets is set out in Table 3.
The National Government provides a general appropriation for maintenance; $3.36 million in FY2016 and
FY2017. The indicative estimate for FY2018 onwards is $3.5 million.
In addition the National Government appropriates funding for the maintenance of state secondary roads
and water supply. The planned/indicative estimate for FY2016 onwards is $2.8 million.
Up until FY2014 the National Government received an allocation under the Amended Compact for
Infrastructure Maintenance Fund (IMF) funding. The estimated amount of the National Government’s
unspent IMF allocation is $430,000, plus the National Government’s matching funds.
3.1.2 State Governments
Fiscal position
The National Government’s aggregate fiscal outcome in recent years masks the large difference between
the performance of the four State Governments. Their performance varies but in FY2014 it was at an all-
time low. For the first time all States recorded deficits and declines in their economies in the same year.
The States are dependent on development partner funding and National Government appropriations for
virtually all infrastructure development.
State governments struggle to match the 5 percent IMF Amended Compact infrastructure funding for
maintenance. The Office of International Affairs’ (OIA) process for releasing IMF grants requires physical
evidence of the appropriation and deposit of matching funds by the States.
The amounts identified for maintenance in Table 3 include the funds required from the States to match
the Amended Compact IMF grants. The funds required from FY2016 to FY2023 to match the Amended
Compact IMF grants and arrears for all States averages $1.9 million per annum. From FY2024 the funds
required to match the CTF IMF grants is estimated at $0.6 million per year.
Table 3 – FSM Governments infrastructure development and maintenance funding
FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
National Government General Maintenance

National 150,000 150,000 - - - - - - - -
Chuuk 460,000 460,000 1,477,700 1,477,700 1,477,700 1,477,700 1,477,700 1,477,700 1,477,700 1,477,700
Kosrae 300,000 300,000 423,500 423,500 423,500 423,500 423,500 423,500 423,500 423,500
Pohnpei - - 984,550 984,550 984,550 984,550 984,550 984,550 984,550 984,550
Yap 300,000 300,000 614,250 614,250 614,250 614,250 614,250 614,250 614,250 614,250
Non-specific 2,150,000 2,150,000 - - - - - - - -
Indicative - - 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000
Total 3,360,000 3,360,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000
National Government state secondary roads, water supply maintenance

National - - - - - - - - - -
Chuuk 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160 1,182,160
Kosrae 338,800 338,800 338,800 338,800 338,800 338,800 338,800 338,800 338,800 338,800
Pohnpei 787,640 787,640 787,640 787,640 787,640 787,640 787,640 787,640 787,640 787,640
Yap 491,400 491,400 491,400 491,400 491,400 491,400 491,400 491,400 491,400 491,400
Indicative 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000
Total 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000 2,800,000
National Government Development Funding

National 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
Chuuk 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000 4,011,000
Kosrae 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000
Pohnpei 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000 2,672,000
Yap 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000 1,667,000
Total 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000
All Governments Matching IMF Funding

National - - - - - - - - - -
Chuuk 507,600 507,288 506,842 506,261 505,545 504,695 503,709 502,589 257,120 261,645
Kosrae 145,475 145,386 145,258 145,091 144,886 144,642 144,360 144,039 73,689 74,986
Pohnpei 338,200 337,992 337,695 337,308 336,831 336,264 335,607 334,861 171,312 174,327
Yap 210,999 210,870 210,684 210,442 210,145 209,791 209,382 208,916 106,880 108,761
IMF Arrears 1,531,268 1,531,268 1,531,268 1,531,268 - - - -
Total 2,733,542 2,732,804 2,731,746 2,730,370 1,197,407 1,195,392 1,193,058 1,190,405 609,000 619,718
TOTAL DEVELOPMENT 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000
TOTAL MAINTENANCE 10,424,809 10,424,071 10,563,014 10,561,637 7,497,407 7,495,392 7,493,058 7,490,405 6,909,000 6,919,718
Source: CMD
3.2 Amended Compact and other US Grant Funding

The US government provides infrastructure development and maintenance assistance to FSM through
Federal grants (and potentially loans) and the Amended Compact.
3.2.1 Amended Compact
Under the Amended Compact FSM is to receive payments of $92.7 million per year (2004 dollars) with
annual partial adjustments for inflation as sector grants, to finance an annual audit, and as contributions
into the CTF. The Amended Compact provides a minimum 30 percent of sector grant funding for public
infrastructure ($24 million in FY2015) and sets out the funding priorities.
The highest priority shall be given to primary and secondary education capital projects and projects that directly
affect health and safety, including water and wastewater projects, solid waste disposal projects, and health care
facilities. Second priority shall be given to economic development-related projects, including airport and seaport
improvements, roads, sea walls, and energy development including renewable energy that cannot be funded
through the rate structure.
(Amended Compact, Article II Economic Assistance Implementation)
Five percent of the sector grant for infrastructure is set aside for the IMF.
The FSM Congress legislates the distribution of the Amended Compact sector grants (Table 4). From
FY2015 on, all the grants are distributed to the States.
Table 4 – Distribution of Amended Compact sector grants
FY2012 FY2013 FY2014 FY2015 on
PLAN OUTLINE
National 10.00 % 10.00 % 5.00 % 0.00 %
Chuuk 38.00 % 38.00 % 40.11 % 42.22 %
Kosrae 10.90 % 10.90 % 11.50 % 12.10 %
Pohnpei 25.31 % 25.31 % 26.72 % 28.13 %
Yap 15.79 % 15.79 % 16.67 % 17.55 %
Source: FSM Congress
The allocation of Amended Compact infrastructure grants is undertaken on an annual basis by the US
and FSM through JEMCO which has three representatives from the US and two from the FSM. JEMCO
decisions are intended to be reached on a consensus basis.
In August 2004 JEMCO delegated to the OIA the authority to approve individual projects that comply
with the Fiscal Procedure Agreement requirements and conform to the consolidated list of projects that
are consistent with the IDP. This resolution delegated the final approval of infrastructure grants to the
OIA Grant Manager in Hawaii.
From FY2004 to FY2012, JEMCO allocated a total of $204 million for infrastructure. In March 2012
JEMCO passed a resolution that no further Amended Compact infrastructure grants will be made until
the IDP 2004 is updated. The combination of the FY2013 to FY2015 funds that have not been allocated
by JEMCO and the allocated funds that have not been granted by OIA over FY2004 to FY2012 is equal to
$111.3 million (“the arrears”, $105.2 million for development and $6.1 million for IMF).
From FY2024 the Amended Compact funding shifts from direct grants to a drawdown from the CTF. The
CTF is intended to accumulate sufficient funds by FY2023 to generate income equivalent to the Compact
grants. At the current level of the fund and expected future contributions the amount in the CTF in
FY2023 is unlikely to be enough for the revenue from the fund (after maintaining the real value of the
capital) to match 2023 Compact grants.
The indicative infrastructure funding from the CTF from FY2024 is $12.2 million, of which $0.6 million is
for the IMF, about half the Amended Compact infrastructure grant amounts in FY2023. This is based on
opening capital in FY2024 of $1,015 million, the fund value maintained in real terms and a 4 percent
distribution.
The indicative Amended Compact/CTF infrastructure funding from FY2016 to FY2025 is shown in Table 5.
Over the ten year IDP period the total funds are $327.5 million ($310.6 million for development and
$16.9 million for IMF).
Table 5 – Amended Compact assistance to FSM (including CTF)

FY2016 FY2017 FY2018 FY2019 FY20FY20 FY2021 FY2022 FY2023 FY2024 FY2025 Total
Amended Compact
Infrastructure Grants (30%)
24,045,480 24,030,720 24,009,576 23,982,048 23,948,136 23,907,840 23,861,160 23,808,096 12,180,000 12,394,368 216,167,424
FSM - IMF Grants

1,202,274 1,201,536 1,200,479 1,199,102 1,197,407 1,195,392 1,193,058 1,190,405 609,000 619,718 10,808,371
Infrastructure Development (excl IMF)

22,843,206 22,829,184 22,809,097 22,782,946 22,750,729 22,712,448 22,668,102 22,617,691 11,571,000 11,774,650 205,359,053
Arrears for Development

26,303,998 26,303,998 26,303,998 26,303,998 105,215,990
Arrears for IMF

1,531,268 1,531,268 1,531,268 1,531,268 6,125,070
Total Amended Compact/CTF Funding for Development (including arrears)

National 2,786,387 2,786,387 2,786,387 2,786,387 11,145,547
Chuuk 20,084,441 20,078,520 20,070,040 20,058,999 9,605,358 9,589,196 9,570,473 9,549,189 4,885,276 4,971,257 128,462,748
Kosrae 5,636,369 5,634,672 5,632,242 5,629,077 2,752,838 2,748,206 2,742,840 2,736,741 1,400,091 1,424,733 36,337,808
Pohnpei 14,080,773 14,076,828 14,071,178 14,063,822 6,399,780 6,389,012 6,376,537 6,362,357 3,254,922 3,312,209 88,387,418
Yap 6,559,235 6,556,774 6,553,249 6,548,659 3,992,753 3,986,035 3,978,252 3,969,405 2,030,711 2,066,451 46,241,522
Total 49,147,204 49,133,182 49,113,095 49,086,943 22,750,729 22,712,448 22,668,102 22,617,691 11,571,000 11,774,650 310,575,043
Total Amended Compact/CTF for the IMF (including arrears)

National 107,403 107,403 107,403 107,403 429,613
Chuuk 1,239,851 1,239,540 1,239,093 1,238,512 505,545 504,695 503,709 502,589 257,120 261,645 7,492,299
Kosrae 358,666 358,576 358,448 358,282 144,886 144,642 144,360 144,039 73,689 74,986 2,160,575
Pohnpei 658,430 658,223 657,925 657,538 336,831 336,264 335,607 334,861 171,312 174,327 4,321,318
Yap 369,191 369,061 368,876 368,634 210,145 209,791 209,382 208,916 106,880 108,761 2,529,636
Total 2,733,542 2,732,804 2,731,746 2,730,370 1,197,407 1,195,392 1,193,058 1,190,405 609,000 619,718 16,933,441
Source: CMD
3.2.2 US Federal Programs
Federal Aviation Administration
FSM’s air transportation sector has benefited greatly across all states from the Federal Aviation
Administration’s (FAA) Airport Improvement Program15 (AIP).
Between FY2004 and FY2015 AIP grants and matching funds totaled $192 million16. An additional $30.5
million of AIP grants and matching funds have been identified for two projects included in the IDP. A
number of other IDP priority projects are strong candidates for AIP funding.
Department of Agriculture
The Rural Utilities Service (RUS) of the US Department of Agriculture (USDA) administers programs that
provide infrastructure to rural communities17.
FSM qualifies for RUS programs that cover infrastructure in the water/wastewater, solid waste, electric
power and telecommunications sectors. FSM Telecommunications Corporation has a current RUS loan
and a number of IDP priority projects are strong candidates for RUS program funding.
USAID
USAID has no regular development program in the FSM, however it responds to requests for disaster
relief.
15 www.faa.gov/airports/aip/overview/
16 (DTCI, DCA, 2015) - Airport Improvement Program in FSM
17
www.rd.usda.gov/about-rd/agencies/rural-utilities-service
3.3 Bilateral Development Partner Funding

3.3.1 Australia
Australia’s aid program focuses on reforms in support of budgetary and economic self-reliance,
environmental management and development coordination. A major area of support has been through
Australia’s Pacific Patrol Boat Regional Program, which aims to protect and manage the region’s vital
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fisheries resources. While maintenance of the three patrol boats is critical to fisheries management
under the fixed asset definition of infrastructure these vessels are not a concern of the infrastructure
plan.
There is currently no Australian participation in FSM’s infrastructure development.
3.3.2 China
The Peoples Republic of China assistance to FSM includes infrastructure, agricultural technical assistance
and scholarships. Recent infrastructure investments include the Okat Bridge in Kosrae ($12.7 million in
FY2014), the Chuuk State Government Complex ($10 million in FY2015) and an untied grant of $9.4
million scheduled for FY2016. Indicative funding for FY2017 to FY2025 is $5 million per year. Future
assistance will be better coordinated in line with the FSM ODA Policy and the IDP.
3.3.3 European Union
The European Union’s (EU) assistance to FSM is currently focused on renewable energy and is managed
by the local office of the Secretariat for the Pacific Communities’ (SPC) Economic Development Division,
North Pacific ACP Renewable Energy and Energy Efficiency Project (North-REP). Funding of $10 million
has been provided for the five years to FY2015 from the European Development Fund EDF 10 and has
been used for solar power in Chuuk, Kosrae and Yap and to refurbish the hydropower station on
Pohnpei.
EDF 11 which runs from FY2016 to FY2020 has a total funding of $18 million. This has been programmed
for village access to electricity/solar for Chuuk, solar and transmission line upgrading for Pohnpei, proper
sizing transformers on Kosrae and improving the efficiency and reliability of electricity of the outer
islands of Yap. Around 75 percent of expenditure is expected to be used for equipment in FY2016 and
FY2017.
Funding beyond FY2020 is expected to be similar to EDF 11 levels at $3.6 million per year although the
EDF 12 focal sectors are yet to be determined.
3.3.4 Japan
Japan’s assistance to FSM is administered by the Japan International Cooperation Agency (JICA)
providing technical cooperation and grant aid.
Economic and social infrastructure forms the most significant component of grant aid with the most
recent projects being the lengthening of the runway plus facility improvements at Pohnpei International
Airport completed in 2012 at a cost of $37 million. This was followed by provision of the inter-island
passenger and cargo vessel Four Winds in 2015 at a cost of $11.1 million.
With the Japanese Government’s record of assistance to FSM over more than 30 years, indicative
funding of $4 million per year for infrastructure is included in the IDP.
3.3.5 Summary
Estimated bilateral funding over FY2016 to FY2025 amounts to $140.4 million and is shown in Table 6.
Table 6 – Estimated Bilateral Funding

FY2016 FY2017 FY2018 FY2019 FY20FY20 FY2021 FY2022 FY2023 FY2024 FY2025
China (PRC)
Total 9,400,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
EU
EDF 11 ($18m, 2015-2020) 6,750,000 6,750,000 1,500,000 1,500,000 1,500,000 - -
Indicative - - - - - 3,600,000 3,600,000 3,600,000 3,600,000 3,600,000
Total 6,750,000 6,750,000 1,500,000 1,500,000 1,500,000 3,600,000 3,600,000 3,600,000 3,600,000 3,600,000
Japan
Total 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Total Bilateral 21,150,000 16,750,000 11,500,000 11,500,000 11,500,000 13,600,000 13,600,000 13,600,000 13,600,000 13,600,000
Source: CMD / ODAD / MFA
3.4 Multilateral Bank Funding

3.4.1 Asian Development Bank
The ADB provides loans, guarantees, equity investments, grants, and technical assistance to FSM. Loans
are financed from ordinary capital resources (OCR) and the Asian Development Fund (ADF). OCR loans
are provided at a quasi-market rate. ADF is a donor fund replenished every four years that provides loans
at concessional terms (long maturities, lower interest rates) as well as grants.
ADB’s indicative lending envelope for the FSM from FY2015 to FY2017 comprising $7.35 million of OCR
and $8.73 million from the ADF18 is being utilized for Pohnpei Port.
Based on ADB’s country plans and average lending over recent years, an indicative $5 million per year is
included in the IDP from FY2018 with follow-on technical assistance grants in FY2016 and FY2017. The
IDP’s institutional component includes priority projects that are strong candidates for ADB technical
assistance funding.
3.4.2 World Bank Group
The World Bank’s program focuses on two themes that support FSM’s SDP:
1. strengthening the enabling environment for private sector development to help sustain
growth; and
2. promoting a sustainable medium term fiscal situation to improve service delivery19
Up until FY2014 the World Bank has assisted FSM with a mix of investments, technical assistance and
analytical activities.
The World Bank’s engagement with FSM over the Country Partnership Strategy period (2014 – 2016) in
FSM includes the following infrastructure-related sectors:
1. improving electricity supply and efficiency including increased use of renewable energy
2. enhancing telecommunications access and affordability
3. improving the management of the impact of climate change and natural hazards
Most significantly the Palau-FSM Regional Connectivity Project will bring fiber-optic connectivity to Yap
and Chuuk, improved satellite connectivity to Kosrae and establishment of the FSM Telecommunication
Regulation Authority. The FSM component of the project is financed by a FSM IDA17 grant allocation
($12.4 million) and FSM’s portion of the regional grant allocation ($38.6 million).
18(ADB, 2014) - Country Operations Business Plan October 2014, Federated States of Micronesia 2015–2017
19(World Bank, 2014) - International Development Association and International Finance Corporation Country Partnership Strategy for the
Federated States Of Micronesia for the period FY2014 – 2017
The Energy Sector Development project (IDA 16 $14.4 million) includes improvements to electric power
generation and energy master planning.
The IDP includes indicative World Bank funding for infrastructure of $3.5 million per year from FY2019.
3.4.3 Multilateral Bank Summary
Table 7 shows total multilateral bank grants of $26 million over FY2016 to FY2025 and $45 million of
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debt funding making a total of $71 million available over the period of the IDP.
Table 7 – Estimated Multilateral Bank Funding
ADB
Grants Total 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
Loan Total - 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Total ADB 500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000
World Bank
Indicative 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000
Total World Bank - - - - 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000
ADB and WB Grants Total 500,000 500,000 500,000 500,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
ADB and WB Grants & Debt Total 500,000 5,500,000 5,500,000 5,500,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000
Source: CMD / ODAD
3.5 Climate Change Funding

A major source of Climate Change (CC) financing is through the United Nations Framework Convention
on Climate Change (UNFCCC). FSM’s first proposal to the UNFCCC Adaptation Fund, “Enhancing the
climate change resilience of vulnerable island communities in FSM”, seeks $8.9 million for coastal
management infrastructure over five years from FY2016 (total $9 million available to FSM for FY2016 to
FY2020). The IDP includes additional Adaptation Fund funding of $2 million per year from FY2021.
Funding under the Green Climate Fund (GCF) will depend on international funding pledges being
honored by 2020. FSM is receiving technical assistance to prepare proposals for this funding and the IDP
includes indicative GCF funding of $2 million per year from FY2020.
Total climate change funding projected over FY2016 to FY2025 from the Adaptation Fund and the Green
Climate Fund amounts to $31 million.
3.6 Summary of Available IDP Funding

Total available funding for the IDP over FY2016 to FY2025 is estimated at $751.9 million of which $655.7
million is for development and $96.2 million for maintenance. The annual total annual amounts are
shown in Table 8 and Figure 6.
Each state receives a funding allocation under the IDP according to the source of funding. Amended
Compact funds are split according the formula set by the FSM Congress. Funds associated with bilateral
donors, multilateral banks and climate change may be for specific projects, in which case there is a direct
allocation to the appropriate state. The underpinning nature of infrastructure warrants a more even
distribution of infrastructure funding than the Amended Compact funding formula. The IDP allocates
these funds to a pool and then distributes 25 percent each to Chuuk and Pohnpei, 20 percent to Kosrae
and Yap and the remaining 10 percent to the National Government.
On this basis Chuuk is allocated 40 percent of total available infrastructure funding, Pohnpei 27 percent,
Yap 17 percent, Kosrae 14 percent and the National Government 2 percent.
Table 8 – Total Available IDP Funding

Total IDP Funding
Development 107,252,204 80,778,182 76,033,095 76,006,943 54,620,729 56,652,448 56,608,102 56,557,691 45,511,000 45,714,650
Maintenance 11,412,083 11,410,607 11,763,493 11,760,740 8,694,814 8,690,784 8,686,116 8,680,810 7,518,000 7,539,437
TOTAL 118,664,287 92,188,789 87,796,587 87,767,683 63,315,543 65,343,232 65,294,218 65,238,501 53,029,000 53,254,086
National
Development 1,786,387 3,286,387 3,286,387 3,286,387 500,000 500,000 500,000 500,000 500,000 500,000
Maintenance 364,807 364,807 214,807 214,807 - - - - - -
TOTAL 2,151,193 3,651,193 3,501,193 3,501,193 500,000 500,000 500,000 500,000 500,000 500,000
Chuuk
Development 58,457,941 30,102,020 28,781,040 28,769,999 19,691,358 20,250,196 20,231,473 20,210,189 15,546,276 15,632,257
Maintenance 4,659,363 4,658,739 5,138,047 5,136,885 3,670,950 3,669,249 3,667,278 3,665,038 3,174,100 3,183,150
TOTAL 63,117,303 34,760,760 33,919,087 33,906,883 23,362,308 23,919,445 23,898,751 23,875,227 18,720,376 18,815,407
Kosrae
Development 11,476,369 11,594,672 10,542,242 10,539,077 8,762,838 9,218,206 9,212,840 9,206,741 7,870,091 7,894,733
Maintenance 1,786,131 1,785,953 1,479,197 1,478,864 1,052,072 1,051,585 1,051,020 1,050,378 909,678 912,272
TOTAL 13,262,500 13,380,625 12,021,438 12,017,941 9,814,911 10,269,791 10,263,860 10,257,119 8,779,769 8,807,004
Pohnpei
Development 22,615,273 22,761,328 21,443,178 21,435,822 15,146,780 15,711,012 15,698,537 15,684,357 12,576,922 12,634,209
Maintenance 2,642,001 2,641,586 3,088,041 3,087,267 2,445,851 2,444,718 2,443,404 2,441,912 2,114,813 2,120,844
TOTAL 25,257,274 25,402,914 24,531,219 24,523,088 17,592,631 18,155,729 18,141,942 18,126,268 14,691,736 14,755,053
Yap
Development 12,916,235 13,033,774 11,980,249 11,975,659 10,519,753 10,973,035 10,965,252 10,956,405 9,017,711 9,053,451
Maintenance 1,959,782 1,959,523 1,843,402 1,842,918 1,525,940 1,525,233 1,524,413 1,523,482 1,319,409 1,323,171
TOTAL 14,876,016 14,993,296 13,823,650 13,818,577 12,045,693 12,498,267 12,489,665 12,479,887 10,337,120 10,376,622
Figure 6 – Total Available IDP Funding
3.7 Plan Funding Requirements

3.7.1 Overall Funding Requirements
The overall funding requirements for infrastructure development are shown in Table 9 ($981 million)
exceed available infrastructure development funding ($656 million) by around 50 percent. The
equivalent measure between total project costs and available funding in IDP 2004 is 117 percent.
The additional funding required to cover the indicated shortfall is reasonable:

1. in the context of section 1.3.2, infrastructure funding between FY2004 and FY2015 was
more than 60 percent above the pro-rata IDP 2004 funding over 12 years (assuming full
Amended Compact infrastructure development grants),
2. given that no funding has been included from significant US Federal programs,
3. with other development partners providing large one-off project funding in the past outside
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of their annual funding envelopes, and
4. with climate change funding is likely to increase.
Table 9 – IDP Development Funding Requirement
Total IDP Development Funding Requirement
80,597,000 40,416,000 81,935,000 266,928,000 136,323,000 109,873,000 111,667,000 73,013,000 36,889,000 40,262,000
National 1,378,000 10,731,000 10,263,000 46,356,000 8,608,000 1,372,000 17,201,000 2,738,000 6,348,000 13,748,000
Chuuk 39,030,000 10,594,000 27,703,000 83,995,000 41,598,000 39,839,000 29,324,000 8,425,000 1,000,000 1,000,000
Kosrae 22,420,000 4,590,000 17,534,000 25,678,000 24,940,000 25,263,000 6,000,000 10,332,000 18,400,000 7,253,000
Pohnpei 16,720,000 7,779,000 12,598,000 65,835,000 29,130,000 21,324,000 46,564,000 33,821,000 2,852,000 15,673,000
Yap 1,049,000 6,722,000 13,837,000 45,064,000 32,047,000 22,075,000 12,578,000 17,697,000 8,289,000 2,588,000
The overall funding requirement of $96.2 million for infrastructure maintenance is shown in Table 10.
This requirement matches with the available funding for infrastructure management.
Table 10 – Total IDP Maintenance Funding Requirement
Total IDP Maintenance Funding Requirement
11,412,083 11,410,607 11,763,493 11,760,740 8,694,814 8,690,784 8,686,116 8,680,810 7,518,000 7,539,437
National 364,807 364,807 214,807 214,807 - - - - - -
Chuuk 4,659,363 4,658,739 5,138,047 5,136,885 3,670,950 3,669,249 3,667,278 3,665,038 3,174,100 3,183,150
Kosrae 1,786,131 1,785,953 1,479,197 1,478,864 1,052,072 1,051,585 1,051,020 1,050,378 909,678 912,272
Pohnpei 2,642,001 2,641,586 3,088,041 3,087,267 2,445,851 2,444,718 2,443,404 2,441,912 2,114,813 2,120,844
Yap 1,959,782 1,959,523 1,843,402 1,842,918 1,525,940 1,525,233 1,524,413 1,523,482 1,319,409 1,323,171
3.7.2 Appropriation Profiles

Each government identified and prioritized the projects included in the IDP. The estimated infrastructure
development appropriations align with these priorities, taking into account a number of constraints and
demands particularly for the first IDP period (FY2016 to FY2019).
Projects that are already designed and ready to move to construction are profiled for appropriation in
FY2016. The remaining projects prioritized into the first IDP period are profiled taking account of the
logistics, the need to develop the State PMOs and their short-term capacity, and considering their
different support demands. These demands included projects where goods are to be purchased, that can
be scheduled in an early year; projects where a limited amount of design is required, and construction
procurement can follow on immediately, such as road rehabilitation; and projects where a full design is
required, which will require procurement of a design consultant entity.
Projects in the other IDP periods (FY2020 to FY2022 and FY2023 to FY2025) are profiled more on the
basis of smoothing overall resource demand on the State PMOs and consultant and contractors
resources. The estimated annual and cumulative appropriation profiles are shown at Figure 7.
Figure 7 – Infrastructure Development Appropriations Profile
The profiling of the infrastructure maintenance appropriations also matches the available funding profile
with the estimated annual and cumulative appropriation profiles shown at Figure 8.
Figure 8 – Infrastructure Maintenance Appropriations Profile
3.7.3 Available Funding and Estimated Appropriations

The IDP appropriation profile broadly balances with the available funding over the first four years as
shown at Figure 9A. In the first three years available funding is greater than is required due to the
backlog of design and procurement required as a result of the March 2012 JEMCO resolution. From
FY2019 onwards the requirement for funding exceeds the available funds. The different governments
have significantly different funding versus appropriation profiles as is highlighted in Figure 9B to Figure
9F.
From FY2019 onwards estimated appropriations exceed available funding so additional funding needs to
be identified and/or priorities reassessed to defer projects or remove them from the IDP. The planned
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review of the IDP in FY2019 will provide the opportunity to undertake this reassessment.
Figure 9 – Available Funding and Estimated Appropriations
A. IDP Cumulative Appropriations and Funding
B. National Government Cumulative Appropriations and Funding

National Government funding is less than planned appropriations from FY2017, which becomes
significant from FY2019 and the shortfall increases in subsequent years.
C. Chuuk State Cumulative Appropriations and Funding

Chuuk planned appropriations do not exceed available funding until FY2020, reach a peak shortfall
in FY2022 and then decline to almost balance by FY2025.
D. Kosrae State Cumulative Appropriations and Funding

Kosrae planned appropriations are close to matching available funding until FY2019. From then on
the funding gap increases to around $50 million by FY2021 and remains at this level for the
remainder of the planning period.
The funding required for the Kosrae State Hospital construction grant in FY2016 exceeds Kosrae’s
Amended Compact arrears and FY2016 appropriation.
E. Pohnpei State Cumulative Appropriations and Funding

Pohnpei’s priority projects can be funded until FY2020. From then on a shortfall opens up to peak
in FY2023 and remains significant until the end of the planning period.
PLAN OUTLINE
F. Yap State Cumulative Appropriations and Funding
Without any projects ready for construction in Yap there is a significant surplus of available
funding until FY2019. Subsequently the funding shortfall opens up and remains substantial until
the end of the planning period.
With infrastructure maintenance appropriations intended to match the availability of funding, there is no
issue with the funding shortfalls. Rather, the challenge for infrastructure maintenance is for the States to
provide the matching funds so that the Amended Compact IMF funding can be utilized as it becomes
available.
Part 4 Management and Implementation
4.1 Current Situation

IPICs were established in each State and at National level to coordinate IDP 2004 infrastructure
implementation. At National level the Economic Policy Implementation Committee fulfilled the IPIC role
although this and the Pohnpei State IPIC are no longer active.
Within the National Government, DTCI has responsibility for the delivery of infrastructure, including
Amended Compact projects, and similar departments deliver infrastructure at State level. Large
development partner programs have their own implementation units. Overall there is no consistency of
implementation processes.
Amended Compact situation
The PMU was established in 2005 by regulation to deliver Amended Compact funded infrastructure
projects in IDP 2004 and is currently a section within DTCI with contracted staff. The PMU is responsible
for both program management and project management for all Amended Compact development
projects. This includes:
for program management: systems, procedures, compliance with Amended Compact
requirements and FSM IDP regulations, preparation of consolidated annual FSM program reviews
and program liaison with the States
for project management: all documentation and procurement for design, construction and
contract supervision services, review of preliminary and final designs with some consultation with
the States and direct contract supervision by PMU staff located in the States
Issues with the current PMU arrangements include:
1. there is no clear and uniform process for the progression of a project, from the initial listing
in the IDP, through pre design, detailed design and construction
2. State IPIC are not involved in scope changes
3. PMU project managers and engineers located in the States are not accessible by the State
stakeholders
4. the flow of information between all the stakeholders is poorly documented and inconsistent
4.2 Strategic Considerations and Guiding Principles

4.2.1 Strategic considerations
Future institutional arrangements will incorporate the following strategic considerations:
Strong and strategic oversight at the program level – strategic oversight is a government function
that will not be outsourced, although it can be reinforced with contracted expertise
Involvement of the States – State involvement is critical to planning and implementing clearly
defined projects that meet stakeholder requirements
Autonomy of the States – the autonomy of the States in planning and implementing their
programs is recognized in the institutional arrangements, notwithstanding the need to work to a
consistent set of processes
Local capability to be developed – there will be a clear path for “localizing” the institutional
arrangements over time and ensuring that those arrangements endure beyond the end of the IDP
International best practice will be considered – best practice program delivery arrangements such
as “Centers of Excellence” will be considered to efficiently utilize resources and maintain
consistency across the program
4.2.2 Guiding principles
In addition to the strategic considerations, the institutional arrangements are designed to achieve the
PLAN OUTLINE
following principles:
1. program and project management processes ensure transparency of decision making
2. competitive bidding processes will be followed to ensure best value outcomes
3. there will be appropriate standards and sanction and segregation of roles and functions to
maintain probity and integrity
4. capability building of local resources will be a primary responsibility of any external resource
4.3 Initial Institutional Arrangements

The initial institutional arrangements in this section takes into account the above strategic consideration
and guiding principles and will apply to all Amended Compact funded infrastructure delivery.
4.3.1 Strategic oversight
A reformed PMU residing within DTCI will collate information for program level Amended Compact
infrastructure delivery.
The National Government to US Government interface will be through the Department of Finance and
Administration.
Jointly CMD and PMU will develop and implement coordinated processes for controlling both financial
and delivery aspects of the Amended Compact infrastructure program.
In time it is intended that this oversight arrangement will apply to all infrastructure programs as a long
term development initiative with the Government to Government/Development Partner interface being
managed by CMD or the Aid Coordination Group depending on the funding source.
4.3.2 Governance
Effective State IPICs provide the basis for strong governance of infrastructure delivery at the State
program and project level once the coordinated control processes have been established.
Most importantly the upgraded role of the IPICs and establishment of the implementation framework
outlined below will allow the devolution of planning and implementation responsibilities to the States
without compromising control, integrity and governance. The reinstatement of the Pohnpei State IPIC is
a priority action for the incoming State Executive.
4.3.3 Implementation model
The implementation model retains the PMU within DTCI but restructures the unit to focus on Program
Management. The PMU will provide ongoing support to each State to ensure standards are developed
and shared, subsequent design and construction contracts are consistent with appropriate risk
management and provide peer review expertise as required.
Project Management, from initial planning, through design to construction completion, is devolved to
the States by the formation of four Project Management Offices (PMOs). The PMOs will undertake all the
project management activities from initial design through to construction and completion.
The general structure of the implementation model is shown in Figure 10.
Figure 10 – Organization Chart of Infrastructure Delivery
A key part of the model is for a single external party to undertake the initial PMO role in each State. Each
State will have its own contract with the external party establishing direct accountability to each State.
This arrangement provides an optimum balance between State responsibility and consistency and
efficiency across the four States.
The model addresses the key aspects of delivering an infrastructure program across FSM by:
 establishing an immediate increase in project management capacity by engaging the
external party to operate in each State
 providing the States with direct involvement in the planning and implementation of their
State program and projects
 retaining PMU to provide guidance on standards and contracts, risk management and
conduct peer reviews and program management oversight
 retaining PMU as a National Government entity to ensure appropriate controls and
segregation of duties
 having PMU provide central coordination of Amended Compact activities and institutional
interfaces on program delivery matters, including tracking and reporting of program status,
expenditure and funding availability
 using one external party to undertake all four PMO roles to provide consistency across all
States in terms of project management approaches, processes and methodologies
 enabling performance comparison between States to facilitate continuous improvement
and identification of particular weaknesses and solutions
 providing opportunities for State government employees to build skills and knowledge by
working as part of or with the external PMO entity
 obligating the external PMO entity to developed capacity in each State
 sharing knowledge on technical and project management matters across all States via the
PMU
 providing a foundation for the delivery of all infrastructure programs and projects over time
 providing greater opportunities for local companies to be involved in design and
construction contracts
In the case of the Pohnpei State PMO, additional support will be provided to DTCI to assist in delivery of
National Amended Compact infrastructure projects.
Proposed PMU Structure
The PMU’s current technical/engineering focus needs to change. In addition to a Program Manager and
administration support, the following skills and expertise are required refocus the unit in its program
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management and coordination role:
Contracting/Procurement Expertise
 establish, maintain and support standard procurement and contract documentation
 provide ongoing guidance to the States on scope definition, contract duration, special
conditions of contract and risk management
 conduct peer reviews
 manage the prequalification of design consultants and contractors
Program Management Skills
 manage the current and future program portfolio, including tracking each project on a time,
cost and quality basis in support of the States
 preparing periodic reports
 working with the States to plan and adjust programs to offset delays
 liaising with the funding agency on technical and other matters
Engineering Expertise
 support the engineering staff in each State by advising/developing appropriate local
standards
 conducting peer reviews of design consultant proposals and design submissions, where
required
 establishing and managing a consolidated engineering library including designs, standards
and cost information for use across FSM
 assisting with the prequalification of design consultants and contractors
 supporting and building project management capacity of DTCI staff engaged in project
management of National infrastructure projects
Proposed State Project Management Offices
Each State PMO will initially have external party resources to establish its project management capability
supplemented by State and other FSM resources. The following resources will be required in each PMO.
Project Management skills
A Project Manager/PMO Manager is required in each State with larger State programs potentially
requiring additional project manager(s).
Contracting Officers
Each PMO requires staff with the ability to undertake procurement and contracting
responsibilities. A Project Manager may be able to undertake this role in States with smaller
programs.
Resident Engineers and Inspectors
Resident Engineers and Inspectors are required in each State PMO and these could be State
employees or other local resources. Other local resources can be progressively brought in as part
of the capacity building process to initially understudy experienced staff.
Technical Specialists
From time to time specialist technical advice may be required on complex or challenging projects
and the contract with the external party will enable technical specialists to work within the PMO
on a short term basis.
General Considerations
The cost of each PMO is estimated to be between 5 and 7 percent of the State program which is within
international benchmarks and internationally recognized as a legitimate program cost.
The IDP includes provision for the required funds for the PMU and State PMOs; the PMU funds will
continue to come from the National Government, and the PMO funds are part of the Amended Compact
component of each State’s infrastructure development program (noting that Amended Compact PMO
funding is dedicated to the delivery of Amended Compact projects).
The external party engaged to manage the PMO will be excluded from participating in any further
contract for the design, construction or supervision on an IDP project for which it has project
management responsibilities to ensure probity is maintained.
The external party will be contractually bound to build local project management capacity in each State
and will have its capacity building plans and performance regularly reviewed by IPIC.
The link between each State PMO and the PMU is very important. The PMU will provide strong process
guidance, contracting expertise, engineering standards and OIA liaison, legitimizing its role and avoiding
being isolated from the PMOs.
The roles and responsibilities for each party involved in planning, implementation and management of
the IDP’s Amended Compact component are documented in Annex A.
4.4 Process Enhancements

All infrastructure projects require defined project management processes from pre-design through funds
release, design and construction to successful completion. Best practice processes incorporate key steps,
hold points, client reviews and concise and complete documentation to support such processes.
It is also good practice to release funds at two stages; initially to release funds to enable the full project
design to be undertaken and then, prior to the construction procurement process commencing, the
funding required for construction. This approach facilitates the orderly progress of the project while
ensuring that after design there is a review of the project scope, time and cost and any changes are
formally signed off before committing funds for construction.
Pre-Design and initial funds release
The PMO will fully document the project scope and formally agree this information with its IPIC,
including:
 project outline, scope and justification
 other options considered if relevant
 reference to IDP, sector and prioritization
 whole of life cost estimate broken down to estimates for project management, design,
construction and maintenance
 delivery strategy, including number and type of contracts, project phasing and timing, links
to other projects and arrangements for construction supervision
 risks and issues that need to be resolved, for instance site access or geotechnical data
 outline program broken down to include key review points at say 30 percent design, end of
design and construction completion
The project will be submitted for the release of initial (generally design) funds once endorsed by the IPIC.
Once the initial funds have been appropriated, the PMO will conduct (if required) a competitive
procurement process in accordance with the prevailing procurement process and regulations to identify
and contract the design consultant.
Design and construction funds release
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The PMO will formally review each project with the IPIC twice during design. The PMO will also hold
regular client meetings with sector representatives.
The IPIC reviews will be held when the design is 30 percent complete and when it is 100 percent
complete (but still subject to review). The 30 percent design review will ensure that designs remain on
an agreed path before significant design costs are incurred.
Following a design being accepted as complete a second submission will be made to the funding agency
for the appropriation of construction funds.
Construction procurement
Once construction funds have been appropriated, the PMO will conduct a competitive procurement
process in accordance with the prevailing procurement process and regulations to identify and contract
the construction contractor and any required supervision consultant.
Variations
The PMO will process variations generally as follows:
 variations in scope require IPIC approval to ensure project outcomes remain fully agreed
 variations in scope or cost that require additional funding will be endorsed by IPIC before
submission to Government and/or OIA (as required) for approval
 change orders to a contract will be processed in accordance with the PMU’s contract
management manual
Completion
The PMO will prepare a Project Completion Report for endorsement by the IPIC. This report will include
analysis of the project on a time, cost and quality basis and the PMO will ensure that all contract
completion activities are finalized, including provision of as-built drawings and operations and
maintenance (O&M) manuals.
4.5 Transitional Arrangements and Longer Term Developments

4.5.1 Transitional arrangements
The target for the implementation model to be in place is Q3 FY2016.
Transition to the implementation model
The transition from the existing arrangements to the State-focused implementation model is complex
and needs to be completed quickly to minimize any further delays in infrastructure delivery. DTCI will
establish the overall transition program and responsibilities and manage its implementation.
The role of PMU during the transition period will be three-fold:
1. to refocus itself on the evolved program management role identified in the implementation
model, including the recruitment of staff to fill any gaps in required skills and expertise
2. support DTCI in implementing the transition program
3. continue to manage on-going projects until the PMOs are in place and ready to take
responsibility for their infrastructure delivery
The overall transition program will involve DTCI working closely with State representatives to:
1. define the scope of services required to meet the PMU and State requirements for project
management services and capacity building
2. undertake a procurement process to identify the preferred external party that is best suited
and able to fulfill the role and functions identified for the PMO in each State, including the
ability to build the capacity of local resources
3. develop a draft contract agreement for each State to negotiate with the preferred external
party – the draft contract agreements will have common general terms, conditions and
schedules and any requirements that may be particular to any State
Each State will then enter into its own contract with the external party.
Other transition activities
In parallel with the transition to the implementation model:
The Attorney General will prepare legislation required to facilitate and support the institutional
arrangements and work with State counterparts to make complementary changes to State legislation.
The Secretaries of Finance and Administration and TCI will prepare replacement Procurement
Regulations for IDP Projects to establish a single set of regulations for procurement of Amended
Compact funded contracts and work with State counterparts on any complementary changes to State
regulations.
4.5.2 Longer term developments
The institutional arrangements, including the implementation model, provide enhanced delivery for
Amended Compact funded infrastructure with strong governance at State level and coordination of the
program at a National level. When fully established and optimized, discussions will be held with
development partners to deliver their infrastructure projects under the same arrangements. This has a
number of advantages including:
 ensuring that the expertise, both private sector and that developed through capacity
building, is employed to deliver all infrastructure
 providing development partners with clearly identified National and State-based entities to
interface with on infrastructure projects
 ensuring FSM maximizes the infrastructure development funding opportunities available
 ensuring high standards of consistent governance and process are applied to all
infrastructure projects
The funding of the PMO under such a revised arrangement will need to be agreed with the development
partners.
Part 5 Sector Overview
5.1 Institutional Arrangements

5.1.1 Power and Water Sector Utilities
The public utilities corporations/authorities created during the 1990s continue to improve their
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management, financial, technical and service delivery capacities and performance, assisted by ongoing
infrastructure investment from external funding sources. Broadly the utilities are now at the point that
their management and administration and O&M activities are covered by tariff revenue. However
service extension and rehabilitation will require external funding for the foreseeable future.
All power utilities are actively planning and implementing renewable energy projects and are moving
steadily towards the Energy Policy targets.
Water and wastewater services in Kosrae remain the responsibility of the Department of Transportation
and Infrastructure. However a framework exists for future infrastructure projects to include transfer of
responsibilities to the Kosrae Utilities Authority (KUA).
Chuuk Public Utilities Corporation (CPUC) receives Amended Compact funding support for four
managerial positions. This support is due to finish no later than FY2018.
The Pacific Power Utilities Benchmarking Report Fiscal Year 201220 rates the performance of the FSM
electric power utilities with their overall financial performance shown in Table 11.
Table 11 – Electric Power Utilities Performance
Electric Power Utility Operating Ratio1
Chuuk Public Utilities Corporation 108.2 percent
Kosrae Utilities Authority 111.4 percent
Pohnpei Utilities Corporation 109.1 percent
Yap State Public Services Corporation 106.8 percent
Pacific Average 98 percent
Note:
1. “OR” = [(total operating costs + depreciation) / (total revenue)] x 100
OR below 100 indicates profitability
The Pacific Water and Wastewater Utilities Benchmarking Report 201321 rates the performance of the
FSM water utilities with their overall performance shown in Table 12.
Table 12 – Water Utilities Performance
Overall Efficiency Operating Cost
Water Utility
Indicator Recovery Ratio
Chuuk Public Utilities Corporation 18 percent 30 percent
Pohnpei Utilities Corporation 66 percent 169 percent
Yap State Public Services Corporation (2012) 47 percent 127 percent
Southern Yap Water Authority (2011) 89 percent 92 percent
20 (PPA, 2012) - Pacific Power Utilities Benchmarking Report Fiscal Year 2012
21
(PWWA, 2013) - Pacific Water and Wastewater Utilities Benchmarking Report 2013
Gagil-Tomil Water Authority 96 percent 103 percent

Pacific Benchmark 70 percent 120 percent
Note:
2013 indicators unless noted
Operating Cost Recovery Ratio:
operating revenues (excluding subsidies)
operating costs (excluding depreciation and debt servicing)
CPUC only started water billing in July 2012 with on-going new meter installation –
further gains in operating cost recovery ratio were made in 201422
5.1.2 Solid Waste Management

There are effective, regulated solid waste management systems in place for the primary state
population/activity centers and there is developing private sector involvement in solid waste
management services. All primary landfill sites utilize the Fukuoka method and there is increasing
separation of recyclable and hazardous wastes from general refuse.
Operational costs are funded from general revenues and there are currently no environmental levies on
industry or consumers.
The solid waste management regulators and operators have identified the need for additional
investment to improve existing facilities, develop new facilities and extend the scope and coverage of
solid waste management, albeit still limited to the main population activity centers.
5.1.3 Roads and Pedestrian Facilities
Road and pedestrian facilities are largely the responsibility of state departments for infrastructure/public
works. Although improvements to the condition of roads and bridges are required, the road networks in
the primary population/activity centers are largely in place with the exception of the Southern
Namoneas and Faichuk groups in Chuuk lagoon.
The key institutional challenge is to introduce an approach to road and bridge asset management that
delivers safe and serviceable road conditions at optimum whole-of-life costs. Extensive development of
both public sector road management capacity (including planning, inspection and contract management
capacity), and private sector maintenance and construction capacity is required.
5.1.4 Maritime Transportation
Port development and management is the responsibility of independent authorities in Kosrae, Pohnpei
and Yap that retain revenue generated from operations and have responsibility for operating costs and
making investments. In Chuuk the port is the responsibility of the Department of Transportation and
Public Works. These agencies have broader responsibilities for navigational aids throughout their
respective States although this is limited in practice.
The private sector provides stevedoring services at the major ports.
Regulation of maritime safety and security is a national responsibility within DTCI and is a key
component of planned revisions to transportation legislation. The capacity of DTCI’s Marine Division in
this area is currently limited and will be developed as part of implementing revised legislation. There are
opportunities to leverage regional capabilities in this area through the Micronesia Shipping Commission.
22
(CPUC, 2014) - CPUC – Annual Report FY 2014
5.1.5 Air Transportation

In the IDP “airport” refers to the international airports, one in each State, and “airstrip” refers to the
aircraft landing facilities on the outer islands.
Airport development and management is the responsibility of independent authorities in Kosrae and
Pohnpei that retain revenue generated from operations and have responsibility for operating costs and
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making investments. In Chuuk and Yap the airport is the responsibility of the Department of
Transportation and Public Works.
The Civil Aviation Division within DTCI provides an oversight function of all airports and outer island
airstrips and works closely with the US Federal Aviation Agency on aviation safety and security. DTCI’s
Civil Aviation and Infrastructure Divisions liaise with the State departments responsible for outer island
airstrip infrastructure and maintenance.
Regulation of aviation safety and security is also a key component of planned revisions to transportation
legislation. The capacity of Civil Aviation Division will need to be developed as part of the introduction of
the revised legislation. Again there are opportunities to leverage regional capabilities in the area of
aviation safety and security.
5.1.6 Telecommunications
The FSM Telecommunications Act of 2014 established the FSM Telecommunication Regulation Authority
and opened the door to market competition. Establishing and building the Authority’s capacity is part of
the current regional telecommunications connectivity project.
FSM Telecommunications Corporation (FSMTC) currently remains the sole telecommunications provider
and continues to improve management, financial, technical and service delivery capacities and
performance. FSMTC is proactive in leveraging external investments, particularly connections to the
international fiber optic network, to bring contemporary telecommunications services and pricing to
consumers.
FSMTC’s financial position has reached the point that it is able to enter into at least concessional loans to
invest in new infrastructure and facilities.
5.1.7 Education
There are Boards of Education in each State and the College of Micronesia (COM) has a Board to manage
its affairs.
Sector coordination is undertaken through the FSM Association of Chief State School Officers comprised
of the Secretary of Education, State Directors of Education and the COM President.
5.1.8 Health
Within the health sector there are a number of regulatory responsibilities that include licensing medical
professionals and setting food safety standards.
There is also a Healthcare Coalition established under a memorandum of understanding comprised of
the Secretary of Health, State Directors of Health and the head of private health provider Genesis. The
role of the Coalition is to coordinate on operational and emergency response matters, ensuring that
medical resources across the whole of FSM can be mobilized as and when required. The Coalition also
acts as FSM’s oversight group on projects and grants in the health sector.
5.1.9 Government Administrative Buildings
The national or state infrastructure/public works agency is responsible for government administrative
buildings.
5.2 Sector Plans

5.2.1 Current Sector Plans
Table 13 – Sector Plans and Studies
Sector Title Status
Air Transportation Airport Master Plan (all States) Completed 2012
Maritime Regional Study on Maritime Draft May 2015
Transportation Transport Systems in the North
Pacific Countries
Pohnpei Port Scoping Study Completed in 2011
Electric Power Regional Energy Plan In Progress
Solid Waste FSM draft National Solid Waste Unknown
Management Management Strategy 2010-2014
Education School Facility Repair and Completed 2012/13
Construction Master Plan
(Chuuk, Pohnpei & Yap)
College of Micronesia - FSM Space Completed 2013
Utilization and Facilities Master Plan
(all campuses)
Climate Change Kosrae Joint State Action Plan Completed 2015
Kosrae Shoreline Management Plan Completed 2014
Yap Joint State Action Plan Completed 2015
Tourism National Tourism Policy and State Draft 2015
Investment Plans
5.2.2 Proposed Sector Plans

Maritime Transportation
The domestic maritime transportation sector requires plans for each State. An early and appropriate
maritime project in each State will be selected to prepare the first stage of the maritime sector plan by
identifying and documenting all existing maritime assets, including jetties, landing places, nature of
access from land and sea. This information will also form part of the asset register as described in section
6.3.
Most sector planning can be done in isolation from the other sectors however an integrated approach to
air and maritime transportation planning for the outer islands is important so that the two modes
complement rather than compete with each other, avoiding the risk of separately planned services
failing.
Air Transportation
The intended development of Airport Safety and Security Plans under the AIP is an important step
towards having IDP air transportation projects considered for implementation funding under this
program.
Education
An Education Sector Infrastructure Code will be developed at State level, with coordination at National
level, to set minimum spatial planning standards for education buildings, additional to Building Codes.
This will be generated out of the early design stages of initial projects and compiled as standard
documents by the PMU.
Health
A Health Sector Infrastructure Code will be developed at State level, with coordination at National level,
to set minimum spatial planning standards for health buildings, additional to Building Codes. This will be
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generated out of the early design stages of initial projects and compiled as standard documents by the
PMU.
Part 6 Institutional Aspects
6.1 Whole of Life Costs

The costs associated with new infrastructure do not end with purchase or construction. It is one step in
the life cycle of an asset that begins with the initial identification of needs through to the disposal of the
asset at the end of its useful life. The stages of the asset life cycle include: concept and planning, detailed
design specification, construction/supply, contract supervision, operation and maintenance and
disposal/decommissioning. Each stage requires planning and coordination and involves costs and time.
When all these costs are combined, the total may be more than double the cost of the initial
purchase/construction price23. Neglecting to consider and budget for whole of life costs results in
preventative maintenance not being undertaken and a generally shorter life than expected. With the
cost-effectiveness of preventative maintenance well established23, this represents a waste of scarce
resources and imposes an unnecessary burden of infrastructure renewal on future budgets where
money could be better utilized elsewhere.
The provision of adequate funding for preventative maintenance as part of a whole of life approach to
asset management is a key institutional issue for FSM, like other Pacific Island countries.
The IDP distinguishes between the costs of keeping an asset in a usable condition (maintenance costs)
and the costs of using the asset to deliver services (operating costs). Maintenance costs are generally
related to standardized activities of a routine or periodic nature that can be reasonably estimated.
Operating costs on the other hand are related to service delivery that can be highly variable over the life
of an asset and between similar assets used in similar situations.
Each of the priority projects included in the National and State IDP volumes incorporate an estimate of
the maintenance costs over the life of resulting asset, providing an estimate of the whole of life cost of
owning the asset and keeping it in a usable condition (but not operating it and delivering services).
Unlike maintenance costs, FSM sector managers have a reasonable understanding of, and make
reasonable budgetary provision for, the cost of operating their assets.
Standardized maintenance cost factors for the IDP sectors are shown in Table 14.
Table 14 – Maintenance Cost Factors
Maintenance Costs per Maintenance Costs over
annum Asset Life
Life (Years)
Sectors & Components (percent Construction (percent of Construction
Cost1) Cost)
(A) (B) (A x B)
Electric Power
Poles & wires 20 2.5 percent 50 percent
Solar Power (feed-in) 20 3.0 percent 60 percent
Diesel Generators 15 15.0 percent 225 percent
Water/Wastewater Systems
Pipes, Tanks 50 2.0 percent 125 percent
Plants 30 4.0 percent 120 percent
Solid Waste Management 20 2.0 percent 40 percent
23
(PIAC, 2013) - Infrastructure Management in the Pacific
Maintenance Costs per Maintenance Costs over

annum Asset Life
Life (Years)
Sectors & Components (percent Construction (percent of Construction
Cost1) Cost)
(A) (B) (A x B)
Roads and Pedestrian Facilities
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Paved Roads 20 3.5 percent 70 percent
Bridges 50 3.0 percent 150 percent
Maritime Transportation
Docks 50 3.0 percent 150 percent
Other Facilities 20 3.0 percent 60 percent
Air Transportation
Runways & Aprons 20 12.0 percent 240 percent
Other Facilities 20 3.0 percent 60 percent
Telecommunication Systems 50 8.0 percent 400 percent
Health 50 4.0 percent 200 percent
Education 50 2.5 percent 125 percent
Government Administrative Buildings 50 3.0 percent 150 percent
Vehicles, Plant and Equipment 10 20.0 percent 200 percent
Vessels 20 20.0 percent 400 percent
Notes:
Based on 8 percent discount rate applied to whole of life maintenance costs
In addition to the quoted reference23, total maintenance costs per annum are based on broad assessments
internationally of similar types and standards of infrastructure
6.2 Infrastructure Maintenance

Like other Pacific Island countries FSM has difficulty in achieving key infrastructure maintenance
objectives: cost effective asset preservation, and acceptable levels of infrastructure safety and amenity.
Virtually all sectors in all jurisdictions consider that funding for infrastructure maintenance is inadequate.
The exception is in the utility sectors where tariff revenue now provides a reasonable amount for
preventative maintenance of water, wastewater and electric power assets (and the delivery of services).
Effectively 10 percent of Amended Compact infrastructure funds are set aside for maintenance (5
percent Amended Compact and 5 percent matching funds) and the National Government allocates
maintenance funds from local revenue. Despite funding being available for infrastructure maintenance,
there is little in the way of formal infrastructure maintenance programs other than in the utility sectors.
The capacity of the States to match the available Amended Compact IMF funding is a major constraint
that is compounded by the OIA’s requirements for releasing those funds. The unspent Amended
Compact IMF funds through to FY2015 are $6.1 million (around $12.2 million in total with the matching
funds).
Although the annual funding for maintenance from IMF and National Government sources is in the order
of $6 million, this is still a relatively small proportion of the total maintenance needs across FSM.
Adopting an average maintenance funding rate of 3 percent from Table 14, the IDP infrastructure
development program by itself will generate a maintenance funding requirement between 4 and 5 times
the current level of maintenance funding without even considering the maintenance funding
requirement for existing infrastructure assets.
Improving the maintenance of FSM’s infrastructure is a major institutional challenge that needs to be
addressed through the IDP, not just with the infrastructure sector agencies, but with the governments
and their policies, strategies and management of financial resources. The following section 6.3 sets out
the FSM’s planned transition to contemporary asset management, supported by technical assistance
projects that are part of the IDP institutional component.
6.3 Transition to Contemporary Asset Management

6.3.1 Introduction
Good quality and sustainable infrastructure is vital to the national economy. It delivers essential services,
drives economic growth and is a significant contributor to the quality of life of the population. With the
buildup of infrastructure assets over the years and questions over the level of investment beyond 2023,
it is essential that the FSM takes steps towards an approach to asset management that minimizes costs
on a whole-of-life basis.
The broad objective is to minimize the life-cycle cost of infrastructure assets whilst maintaining
acceptable levels of amenity and serviceability. This contrasts with the “build then rebuild” approach
that is characterized by the asset being replaced before the intended design life being reached and low
levels of serviceability and amenity over much of the asset life. These two approaches are illustrated in
Figure 11.
Figure 11 – Asset Lifecycle Approaches
100 500
90
Build-Rebuild Approach 450
Serviceability & Amenity
80 400
70
Rebuild 350
60 300
Cost
Acceptable level of Serviceability & Amenity
50 250
40 200
30 150
20 100
Level of Serviceability & Amenity
10 50
0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Time
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
100 500
90 450
Serviceability & Amenity
80 400
70 350
60 300
Cost
Acceptable level of Serviceability & Amenity
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50 250
40 200
30 150
20 100
10 Whole of Life Approach 50
0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Time
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
The whole of life costs can be heavily influenced by the design of infrastructure assets so it is critical that
designs are sympathetic to the prevailing climatic conditions and skills and equipment available in the
FSM.
In summary, the whole of life approach is founded on the principles of:
1. maintaining the serviceability and amenity of assets at acceptable levels in the most cost
effective manner, and
2. infrastructure design and construction that is appropriate to the FSM
The core benefits that will accrue to the FSM from this approach are:
1. the total capital and recurrent investment in infrastructure assets is minimized over the
whole of life, and
2. assets generally meet the users’ needs for serviceability and amenity and avoid the cost and
other impacts that arise from sub-standard assets
6.3.2 Implementing Whole-of-Life Asset Management
DTCI is the National Government’s lead agency for planning and implementing a whole-of-life approach
to asset management and will work in close coordination and cooperation with its counterpart agencies
in the States.
Policy
The FSM Governments will establish an infrastructure asset management policy that includes an overall
policy statement, elements of policy specific to infrastructure sub-sectors and responsibilities for policy
application and implementation.
A core principle will be “keeping good assets good”, that is resources should be prioritized to ensure
that assets of good standard do not deteriorate unnecessarily and incur higher whole of life costs and/or
fail to meet the required standards for serviceability and amenity.
Strategies
The infrastructure asset management policy will be supported by an overall strategy and separate
sector strategies. These strategies will describe the approaches and methodologies that the FSM
Governments will follow in implementing the policy, including:
1. strategy objectives and performance measures (e.g. condition and safety of roads, quality
and availability of water)
2. classification of assets
3. broad allocation of available resources between and within sub-sectors
4. addressing the backlog of sub-standard infrastructure to bring it to a standard that makes

ongoing maintenance cost effective
5. action plans for implementing the asset management policy and strategies at sub-sector
level
Information
Implementation of the policy and strategies is highly dependent on the availability and quality of asset
information, particularly the following components:
asset registers – records of ownership, location, physical, administrative and cost information for
individual assets that provide base information for asset management planning, programming and
evaluation
collection tools – systems, procedures, equipment and resources that ensure that asset register
information is collected and is complete, timely and of suitable quality
analysis and modelling tools – systems, procedures, equipment and resources that facilitate
analysis of asset register information to prepare programs and evaluate the effectiveness of asset
management – this can vary from integrated spreadsheets to specialist modelling software
Programs
With the above policy, strategies and information in place, it will be possible to develop asset
management programs for each sector in each State, separated out for each asset category and
program component (see below).
Asset management programs will be integrated into Government budget planning processes and have a
single set of guidelines to provide a national basis for budget targets, criteria and prioritization.
Programs will be prepared on an annual basis with a three year outlook – an “approved” program and
budget for Year 1 and “indicative” programs and budgets in Years 2 and 3. This will permit the
infrastructure agencies to plan and implement asset management programs more efficiently, particularly
through multi-year maintenance contract arrangements.
Accountability for and management of the programs will be integrated into the Government processes
that include ongoing performance reporting and annual program evaluation.
Program Components
Each sector program will include the following asset management program components:
routine maintenance – maintenance undertaken on a continuous basis to address minor defects
before they contribute to further damage or deterioration to the asset, such as potholes in roads,
leaks in water supply systems or broken windows in Government buildings
periodic maintenance – maintenance undertaken on a cyclic basis to restore at least some of the
serviceability and amenity of assets that are lost over time and to protect against further
unnecessary deterioration such as resurfacing of roads, painting of Government buildings or
intensive cleaning of water treatment facilities
rehabilitation – work that is undertaken to “renew” the asset when routine and/or periodic
maintenance is no longer cost-effective, for example replacing failed hard-stand dock areas,
replacing cladding of timber buildings or replacing lengths of water supply lines that are
continually leaking
Capital Investment Projects

A capital investment project will generally be required when:
1. asset management program components are no longer cost-effective in maintaining the
serviceability and amenity of the asset, for example to maintain a bridge to carry its design
load or to maintain a building in a safe condition
PLAN OUTLINE
2. the capacity or function of the asset no longer meets the needs of users, for example a road
needs to carry more traffic, a water supply main needs to supply more water or a dispensary
needs additional space to treat more patients
6.4 Institutional Projects

Asset Management
The IDP includes an institutional project to support the implementation of whole of life asset
management in the FSM through technical assistance and capacity building, including:
Policy and Strategies – establish the overall asset management policy and strategy and sector
strategies with the participation and commitment of all governments and stakeholders, including a
basis for adequate and sustainable funding over and above capital investment
Asset Identification, Ownership and Registration – develop registers of infrastructure assets and
progressively add details of ownership/responsibility, category, condition and maintenance need
Capacity – plan then develop and implement asset management capacity in terms of:
People – dedicated and sufficient resources with responsibility and skills for collecting and
analyzing asset information and planning, managing and implementing asset management
programs
Processes – procedures, guidelines and tools for evaluating and prioritizing asset
management needs and monitoring and reporting the effectiveness of programs
Technology – appropriate systems to support the collection, recording, analysis, monitoring
and reporting of asset management information
Budgets – adequate budget for a sustainable asset management capacity and optimized
asset management programs
Private sector service providers – a sustainable and competitive pool of service providers to
undertake asset management activities
Transportation Regulation
The IDP includes a technical assistance project to support DTCI’s implementation of revised maritime and
air transportation safety and security regulations, including any regional integration or cooperation.
FSM Building Code
At present projects are generally designed in accordance with international codes, standards and
guidelines, but with only limited account taken of the specific circumstances of FSM. Some guidelines
have been developed for specific aspects including seismic and wind loading and are summarized in
Climate Adaptation Guide for Infrastructure24.
It is therefore intended that a National Building Code will be developed, with State specific requirements
where appropriate. The Code will be based on the International Building Code and other US based codes
and standards, but take account of the requirements of FSM and incorporate existing state and national
guidelines.
24
(DTCI, DoI, 2014) – Climate Adaptation Guide for Infrastructure
Chuuk Land Registry

The IDP includes a project to support the efforts of Chuuk State to reestablish its land title records. This
will involve the recovery of records kept in Guam and Hawaii, identification of land title boundaries
through consultation with stakeholders and survey, and recording legally sufficient title information.
Successful implementation of the Chuuk IDP education and health sector programs depends on
establishing public ownership over school and dispensary land through this and the targeted land
definition and acquisition projects included in Volume 3. However the benefits of the project will be
more far-reaching than just the implementation of the IDP projects.
List of Institutional Projects
The IDP institutional projects are listed in Table 15 and outlined in the following project proformas.
Table 15 – Institutional Projects
Required Target
ID Project Title
Funding ($) Period
IN/1 Asset Management Technical Assistance 2,000,000 All
IN/2 National Building Code 200,000 1
IN/3 Strengthen Transportation Regulation 200,000 1
IN/4 Re-establish Chuuk Land Title Records 2,000,000 2
Total Funding Required 4,400,000
Project I 1 – Asset Management Technical Assistance (IN/1)
Project Title: Asset Management Technical Assistance Sector: Institutional
Estimated Cost: 2,000,000
Project Plan, develop and implement a contemporary approach to asset management for infrastructure
Description/Scope: across FSM, including:
 Policy and Strategies
 Asset Registers
 Capacity Development involving:
 People
 Processes
 Systems and Equipment
 Budgets
 Private sector service providers
Agencies Responsible: DTCI in conjunction with sector managers at national and state level
Project Objectives/ Implement a whole of life approach to asset management such that costs are minimized and asset
Outcomes: are maintained to acceptable levels of safety and amenity
Project Justification: Whole of life infrastructure costs are not minimized, asset management is not adequately funded and
adequate levels of safety and amenity are not maintained
Project Status: Concept
Inclusions: To be defined as part of TA scoping
Exclusions: To be defined as part of TA scoping

Risks & Dependencies: To be identified as part of TA scoping
Project I 2 – National Building Code (IN/3)
Project Title: National Building Code Sector: Institutional
Estimated Cost: 200,000
Project Develop and implement a National Building Code appropriate to the FSM based on the International
Description/Scope: Building Code and other relevant codes and standards and incorporating specific aspects on a state-
PLAN OUTLINE
by-state basis including seismic and wind loading.
Agencies Responsible: DTCI
Project Objectives/ FSM infrastructure is designed and constructed according to relevant and appropriate codes and
Outcomes: standards
Project Justification: At present projects are generally designed in accordance with international codes, standards and
guidelines, but with only limited account taken of the specific circumstances of FSM
Project Status: Concept
Inclusions: State-specific provisions and implementation at national and state levels

Risks & Dependencies: Available codes and standards do not adequately cover FSM’s needs
Project I 3 – Strengthen Transportation Regulation (IN/3)
Project Title: Strengthen Transportation Regulation Sector: Institutional
Estimated Cost: 200,000
Project Provide assistance to establish the regulatory arrangements included in the revised transportation
Description/Scope: legislation, including the development of management, process and resource capacity
Agencies Responsible: DTCI – Divisions of Civil Aviation and Marine
Project Objectives/ Undertake transportation regulation in accordance with revised legislation

Outcomes:
Project Justification: FSM has identified gaps in its regulation of transportation and revised legislation is being developed –
establishing the regulatory agencies and developing management, process and resource capacity is
critical to fulfilling the objectives of the revised legislation
Project Status: Legislation is being prepared
Inclusions: To be defined as part of TA scoping

Risks & Dependencies: To be identified as part of TA scoping
Project I 4 – Reestablish Chuuk Land Title Records (IN/4)
Project Title: Re-establish Chuuk Land Title Records Sector: Institutional
Estimated Cost: 2,000,000
Project Reestablish Chuuk’s land title records from:

Description/Scope:  Information held by institutions in Guam and Hawaii
 Collecting and registering of additional land tenure and title information
 Consulting and negotiating with stakeholders
Agencies Responsible: Division of Commerce and Industry
Project Objectives/ Reestablish definitive land title records for Chuuk

Outcomes:
Project Justification: Most matters dealing with land title in Chuuk are impacted by the absence of definitive land title
records
Project Status: Planning
Inclusions: Establishment of land title records from existing and reconstructed information
Exclusions: Supporting/enabling legislation

Risks & Dependencies: Lack of legislative support for reestablishment of land title records
Part 7 Monitoring & Reporting

Performance Indicators
A range of performance indicators that are influenced by the infrastructure in each sector (other than
government administrative buildings) are included in Annex B. The indicators cover aspects including
accessibility, quality, efficiency, safety and affordability/financial sustainability.
PLAN OUTLINE
Monitoring and Evaluation
Infrastructure managers and IPICs will monitor ongoing infrastructure performance to identify and plan
improvements to infrastructure performance and service delivery and changes in the IDP priority
projects and priorities.
Reporting
The performance indicators will be measured on an annual (fiscal year) basis and reported by the
National Government within 3 months of the end of the fiscal year.
Annexes
Annex A Infrastructure Development Responsibility Matrix _______________________________________ 57
ANNEXES
Annex B Performance Indicators ____________________________________________________________ 59
B.1 Electric Power 59
B.2 Water/Wastewater Systems 59
B.3 Solid Waste Management 60
B.4 Roads and Pedestrian Facilities 61
B.5 Maritime Transportation 62
B.6 Air Transportation 62
B.7 Telecommunications Sector 63
B.8 Education 63
B.9 Health 63
Annex C Bibliography _____________________________________________________________________ 65
Annexes Page | 55
P a g e | 56 Annexes
Annex A Infrastructure Development Responsibility Matrix
Management
Coordination
State PMOs1
State IPICs
FSM Agency
Compact
Division
Group
PMU1
DTCI
Aid
Activity
ANNEXES
Preparing the Annual
Accountable Responsible Consulted
Implementation Plan
Collating submissions to
JEMCO and OIA
Collating other aid

submissions (EU, JICA, etc.)
Program coordination and

Accountable Responsible Informed
performance analysis
Manage transition to the

PMU/PMO model
Project completion analysis

and lessons learnt
Knowledge management
(design criteria, standards, Accountable Responsible Informed
terms, conditions)
Design consultant pre-

Accountable Responsible Informed
qualification
Design consultant selection Accountable Responsible
Contractor pre-qualification Accountable Responsible Informed
Contractor selection Responsible
Peer reviews Accountable Responsible Consulted
Project management Accountable Responsible
Forward project programs

Accountable Responsible
and cash flows - Compact
Forward project programs

Accountable Responsible
and cash flows –EU, JICA…
Planning and design Accountable Responsible
Annexes Page | 57
Management
Coordination
State PMOs1
State IPICs
FSM Agency
Compact
Division
Group
PMU1
DTCI
Aid
Activity
Construction supervision Accountable Responsible
Scope and design verification Accountable Responsible
Capacity Building Accountable Informed Responsible
Variation control Accountable Responsible
Notes:
1. PMU and PMO involvement in non-Compact infrastructure development projects is a longer term
development and subject to agreement of the relevant funding agencies
Annex B Performance Indicators
B.1 Electric Power

Operational performance indicators for FSM electric power utilities are available from the annual Pacific
Power Utilities Benchmarking Report prepared by the Pacific Power Association (www.ppa.org.fj)
ERROR! REFERENCE SOURCE NOT FOUNDA.NNEXES

Baseline
Indicator Chuuk Kosrae Pohnpei Yap
Year
Accessibility Indicators
1. Households with access to grid connected 2012 80 77 96 57
electrification (percent)
2. Electricity production (000 kWh) 2012 13,866 5,463 32,351 12,255
3. Electricity load factor (percent) 2012 59.2 54.8 62.4 67.0
Quality Indicators
4. System Average Interruption Frequency (SAIFI) 2012 (a) (a) (a) 16.7
events per customer
5. System Average Interruption Duration (SAIDI) 2012 78,120 845 (a) 17,704
mins per customer
Efficiency Indicators
6. Specific fuel oil consumption (kWh per liter) 2012 3.68 3.58 3.23 3.81
7. Distribution losses (percent of output) 2012 28.1 1.8 19.0 25.1
8. Renewable energy share (percent) 2012 0.0 0.0 0.0 0.2
Affordability Indicators
9. Average residential end-user electricity tariff 2012 0.56 0.40 0.49 0.44
(cents/kWh)
10. Average commercial end-user electricity tariff 2012 0.59 0.42 0.49 0.46
(cents/kWh)
Notes:
(a) Information not included in the PPA Benchmarking Report
Annexes Page | 59
B.2 Water/Wastewater Systems

Operational performance indicators for FSM water and wastewater utilities are available from the
annual Pacific Water and Wastewater Utilities Benchmarking Report produced by the Pacific Water and
Wastes Association (www.pwwa.ws)
Baseline Chuuk Kosrae Pohnpei Yap

Indicator
Year CPUC DTI PUC YSPSC GTWA SYWA
1. Access to improved urban 2012 90 82 (a) 93 92 100
water source (percent total
population)
2. Access to improved urban 2012 63 40 (a) 70 n/a n/a
sanitation (percent total
population)
3. Availability of water supply 2012 24 20 (a) 24 24 24
in piped water supply
systems (average hours per
day)
Efficiency Indicators
4. Employees (per 1000 2013 14.6 9.6 7.2 14.9 8.0 (a)
connections) (2012)
5. Non –revenue water 2013 72 100 16 47 4 (a)
(percent of water produced) (2012)
Affordability and Financial Sustainability Indicators
6. Cost recovery (tariff 2013 30 n/a 169 127 103 92
revenue/operating cost (2012) (2011)
(percent))
7. Average tariff for water 2013 1.55 n/a 2.08 1.51 2.27 1.70
services ($ per 1,000 gal)
Safety Indicators
8. No. of drinking water safety 2013 1 2 3 1 1 0
plans in place
9. Drinking water quality 2013 100 / 85 0 / 50 83 / 96 90 / 90 100 / 71 0 / 70
compliance (%) – residual
chlorine/microbiological
Notes:
(a) Information not included in the PWWA Benchmarking Report
B.3 Solid Waste Management

Baseline
Year
1. Access to regular solid waste collection service in 20__

urban areas ( percent of urban population)
2. Frequency of solid waste collection service in 20__
urban areas (number per week)
Quality Indicator
3. Facilities with up-to-date environmental 20__
monitoring reports readily available (number)
Efficiency Indicator
4. Cost of waste disposed ($ per capita) 20__
Sustainability Indicators
5. Systems for sorting solid/recyclable/hazardous 20__
wastes (number)
6. Exported recyclable commodities or waste 20__
(number of shipping containers)
B.4 Roads and Pedestrian Facilities

Baseline
Year
1. Total road network (miles) 20__
2. Paved roads (miles) 20__
3. Unpaved roads (miles) 20__
4. Registered motor vehicles (number) 2013 362 801 5,275 2,564
Quality Indicator
5. Condition of roads (percent of road network in 20__
poor condition)
6. Road network receiving regular routine 20__
maintenance (percent of road network)
Annexes Page | 61
B.5 Maritime Transportation

Baseline
Year
1. International container services (annual number 2014 72 30 53 48
of container ships)
2. Container throughput (annual number of 2014 1,155 421 714
containers (TEU) imported & exported)
Quality Indicator
3. Vessel turnaround time (average time in days) 2014 <1.0 1.0
4. Delay waiting to enter port (average time in days) 20__
Affordability Indicator
5. Port charges ($/Twenty-foot Equivalent Unit) 20__
Safety Indicator
6. Maritime incidents (Number) 20__
B.6 Air Transportation

Baseline
Year
1. Operational airports/airstrips (number) 2015 1/3 1/- 1/3 1/2
2. Scheduled international airport in-bound 2015 7 6 8 3
passenger flights (average flights per week)
3. Scheduled airstrip in-bound flights (average 20__ n/a
flights per week)
4. Cost of international airfreight ($/ton-mile) 20__
Quality Indicator
5. IATA Level of Service for international airports 20__
Safety Indicators
6. Aviation incidents (number) 20__
7. ICAO safety audit indicator for international 20__
airports
B.7 Telecommunications Sector

Baseline
Year
1. Mobile-cellular network coverage (percent of 20__

population)
2. Fixed broadband internet subscriptions (percent 20__
of population)
3. 3G (minimum) mobile-cellular network coverage 20__
(percent of population)
4. 4G (minimum) mobile-cellular network coverage 20__
(percent of population)
Quality Indicator
5. Internet bandwidth (Mbit/s per capita) 20__
Affordability Indicators
6. Cost of mobile-cellular prepaid ($ per minute 2015 0.50 0.50 0.50 0.50
local call)
7. Cost of international mobile-cellular ($ per 2015 0.75 0.75 0.75 0.75
minute call to Hawaii)
8. Cost of 3G data ($ per MB for pre-paid) 2015 0.08 0.08 0.08 0.08
9. Cost of fixed internet ($/month for 512 kbps 2015 65 65 65 65
service)
B.8 Education
Baseline
Year
Quality Indicator
1. Schools meeting the FSM School Accreditation 2014 6 100 82 15
Standards (percent)
B.9 Health
Baseline
Year
Accessibility Indicator
1. Patient encounters provided in homes and 2014 77,156 8,738 135,604 18,281
dispensaries (number)
2. Average length of stay in State hospitals (days) 2014 4.9 5.3 4.6 4.8
Annexes Page | 63
Annex C Bibliography
2023 Planning Committee. (2014). FSM 2023 Action Plan. Government of FSM.
ABM/CSIRO. (2014). Climate Variability, Extremes and Change in the Western Tropical Pacific: New
Science and Updated Country Reports, Pacific-Australia Climate Change Science and Adaptation
Planning Program. Australian Bureau of Meteorology and Commonwealth Scientific and

Industrial Research Organisation.
ADB. (2014). Country Operations Business Plan, Federated States of Micronesia 2015–2017. Asian
Development Bank.
ADB. (2015). Federated States of Micronesia: Country Programming Mission, 2–4 June 2015,
Memorandum of Understanding between the Government of the Federated States of Micronesia
and the Asian Development Bank. Asian Development Bank.
ADB Pacific Studies Series. (2006). Climate Proofing – A Risk-based Approach to Adaptation. Asian
Development Bank.
Aloterre Consulting. (2012c). Chuuk State School Facility Repair and Construction Master Plan. Aloterre
Consulting.
Aloterre Consulting. (2012p). Pohnpei State School Facility Repair and Construction Master Plan. Aloterre
Consulting.
Aloterre Consulting. (2012y). Yap State School Facility Repair and Construction Master Plan. Aloterre
Consulting.
Anderson, C. L. (2012). Analysis of Integrating Disaster Risk Reduction and Climate Change Adaptation in
the US Pacific Islands and Freely Associated States, Technical Report 201105, Hazards, Climate,
and Environment Program. Social Science Research Institute, University of Hawai`i at Mānoa.
COM. (-). Infrastructure Development Plan, College of Micronesia-FSM, undated (extracted from the COM
Master Plan (op cit)). College of Micronesia.
COM. (2013). College of Micronesia – FSM Space Utilization and Facilities Master Plan Study, Beca
International Consultants. College of Micronesia.
CPUC. (2014). CPUC – Annual Report FY 2014. Chuuk Public Utilities Corporation.
DHSA. (2013). Department of Health and Social Affairs Annual Report 2013. Department of Health and
Social Affairs.
DRD, DoE. (2010). Federated States of Micronesia Energy Policy, Volumes I and II. Department of
Resources and Development, Division of Energy.
DTCI. (2004). FSM Infrastructure Development Plan FY2004-FY 2023. Department of Transportation,
Communication and Infrastructure.
DTCI, DCA. (2015). Airport Improvement Program in FSM. Department of Transportation, Communication
and Infrastructure, Division of Civil Aviation.
DTCI, DoC. (2012). Federated States of Micronesia National ICT and Telecommunications Policy.
Department of Transportation, Communication and Infrastructure, Division of Communications.
DTCI, DoI. (2014). Climate Adaptation Guide for Infrastructure (T Barry, ADB TA 7927). Department of
Transportation, Communication and Infrastructure, Division of Infrastructure.
GCCA. (July 2013). Climate Change Profile, Federated States Of Micronesia, Version 2, July 2013. Global
Climate Change Alliance: Pacific Small Island States Project.
Annexes Page | 65
GoFSM. (2004). FSM's Strategic Development Plan (2004 - 2023): The Next 20 Years, Achieving Economic
Growth & Self-Reliance. Government of FSM.
GoFSM. (2009). Nationwide Climate Change Policy. Government of FSM.
GoFSM. (2012). National Climate Change and Health Action Plan. Government of FSM.
GoFSM. (2013a). Eighteenth Congress Of The Federated States Of Micronesia Second Regular Session,
2013 Congressional Bill No. 18-72, C.D.1, C.D.2, C.D.3 Pc No. 18-178 Public Law No. 18-34.
Government of FSM.
GoFSM. (2013b). Nation Wide Integrated Disaster Risk Management and Climate Change Policy.
Government of FSM.
GoKS. (2015). Action Plan for Disaster Risk Management and Climate Change. Government of Kosrae
State.
GoYS. (2015). Yap Joint State Action Plan for Disaster Risk Management and Climate Change, Draft.
Government of Yap State.
Jones, P. (2011). The State of Pacific Towns and Cities. Asian Development Bank.
Leo A Daly. (2012c). Chuuk International Airport Final Master Plan. Leo A Daly.
Leo A Daly. (2012k). Kosrae International Airport Final Master Plan. Leo A Daly.
Leo A Daly. (2012y). Yap international Airport Final Master Plan. Leo A Daly.
NIWA. (2013). Kosrae Shoreline Management Plan, NIWA Client Repot No HAM2013-133. National
Institute of Water & Atmospheric Research Ltd.
PIAC. (2013). Infrastructure Management in the Pacific. Pacific Infrastructure Advisory Centre.
PPA. (2012). Pacific Power Utilities Benchmarking Report Fiscal Year 2012. Pacific Power Association.
PWWA. (2013). Pacific Water and Wastewater Utilities Benchmarking Report. Pacific Water and Wastes
Association.
Stanley Consultants. (2013). Needs Assessment Study, Chuuk State Hospital. Stanley Consultants.
World Bank. (2014). World Bank 2014. International Development Association and International Finance
Corporation Country Partnership Strategy for the Federated States Of Micronesia for the period
FY2014 – 2017. World Bank Group.

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Federated States of Micronesia

INFRASTRUCTURE DEVELOPMENT PLAN

Introduction Volume 3 Chuuk State Infrastructure

The following Federated States of Micronesia Infrastructure Development Plan FY2016-FY2025

As the 8th President of the Federated States of Micronesia I

Infrastructure Investment by Sector and Activity

Infrastructure Funding by Source

Acronyms & Abbreviations

ADB Asian Development Bank JEMCO Joint Economic Management

Volume 1 Plan Outline

1.1 Country Information

1.2 Economic and Strategic Planning

1(Jones, 2011) - The State of Pacific Towns and Cities

2023 Action Plan

Telecommunications Sector Policy

1.3 Infrastructure Planning

Table 1 – Planned IDP 2004 Sector Investments

1.3.2 Infrastructure Development Plan 2016 - 2025

1.4 Environment and Climate

Pacific-Australia Climate Change Science and Adaptation Planning Program

1.4.1 Environmental Planning

1.4.4 Response to Climate Change

8 (GoFSM, 2009) - Nationwide Climate Change Policy 2009.

C.D.1, C.D.2, C.D.3 Pc No. 18-178 Public Law No. 18-34.

1.5 Plan Development Process

The three components are described below.

Strategic Rating (out of 10) = ∑ 𝑅𝑎𝑡𝑖𝑛𝑔 𝑜𝑓 𝑒𝑎𝑐ℎ 𝑠𝑡𝑟𝑎𝑡𝑒𝑔𝑖𝑐 𝑜𝑏𝑗𝑒𝑐𝑡𝑖𝑣𝑒 / 4.5

Table 2 – Contribution ratings

1.5.3 Institutional Component

 include any provision for UN-related climate change adaptation funding

Part 2 Infrastructure Strategy

2.1 Role of Infrastructure

2.2 Strategy Objectives

Economic Social Environmental Institutional

Improved Improved access to Improved Improved capacity

2.3 Sector Objectives

2.3.5 Maritime Transportation

2. improve secondary health care services

Part 3 Investment Strategy

3.1 FSM Infrastructure Funding

National Government General Maintenance

National Government state secondary roads, water supply maintenance

National Government Development Funding

All Governments Matching IMF Funding

3.2 Amended Compact and other US Grant Funding

Table 5 – Amended Compact assistance to FSM (including CTF)

FSM - IMF Grants

Infrastructure Development (excl IMF)

Arrears for Development

Arrears for IMF

Total Amended Compact/CTF Funding for Development (including arrears)

Total Amended Compact/CTF for the IMF (including arrears)

3.3 Bilateral Development Partner Funding

Table 6 – Estimated Bilateral Funding

Source: CMD / ODAD / MFA

3.4 Multilateral Bank Funding

Source: CMD / ODAD

3.5 Climate Change Funding

3.6 Summary of Available IDP Funding

Table 8 – Total Available IDP Funding

Figure 6 – Total Available IDP Funding

3.7 Plan Funding Requirements

The additional funding required to cover the indicated shortfall is reasonable: